Correlation Between Strats Trust and Structured Products

Can any of the company-specific risk be diversified away by investing in both Strats Trust and Structured Products at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Strats Trust and Structured Products into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Strats Trust Cellular and Structured Products Corp, you can compare the effects of market volatilities on Strats Trust and Structured Products and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Strats Trust with a short position of Structured Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strats Trust and Structured Products.

Diversification Opportunities for Strats Trust and Structured Products

0.37

Correlation Coefficient

Strats Trust  Structured Products

Weak diversification

The 3 months correlation between Strats and Structured is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Strats Trust Cellular and Structured Products Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Structured Products Corp and Strats Trust is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Strats Trust Cellular are associated (or correlated) with Structured Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Structured Products Corp has no effect on the direction of Strats Trust i.e., Strats Trust and Structured Products go up and down completely randomly.

Pair Corralation between Strats Trust and Structured Products

Considering the 90-day investment horizon Strats Trust is expected to generate 1.1 times less return on investment than Structured Products. But when comparing it to its historical volatility, Strats Trust Cellular is 2.59 times less risky than Structured Products. It trades about 0.14 of its potential returns per unit of risk. Structured Products Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,763  in Structured Products Corp on September 3, 2024 and sell it today you would earn a total of  131.00  from holding Structured Products Corp or generate 4.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Strats Trust Cellular  vs.  Structured Products Corp

Strats Trust Cellular

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strats Trust Cellular are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking indicators, Strats Trust is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Structured Products Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Structured Products Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Structured Products is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Strats Trust and Structured Products

The main advantage of trading using opposite Strats Trust and Structured Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strats Trust position performs unexpectedly, Structured Products can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Structured Products will offset losses from the drop in Structured Products' long position.

The idea behind Strats Trust Cellular and Structured Products Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.