Correlation Between Strats SM and Credit Enhanced
Can any of the company-specific risk be diversified away by investing in both Strats SM and Credit Enhanced 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 SM and Credit Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strats SM Trust and Credit Enhanced Corts, you can compare the effects of market volatilities on Strats SM and Credit Enhanced 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 SM with a short position of Credit Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strats SM and Credit Enhanced.
Diversification Opportunities for Strats SM and Credit Enhanced
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Strats and Credit is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Strats SM Trust and Credit Enhanced Corts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Enhanced Corts and Strats SM 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 SM Trust are associated (or correlated) with Credit Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Enhanced Corts has no effect on the direction of Strats SM i.e., Strats SM and Credit Enhanced go up and down completely randomly.
Pair Corralation between Strats SM and Credit Enhanced
Considering the 90-day investment horizon Strats SM Trust is expected to generate 1.46 times more return on investment than Credit Enhanced. However, Strats SM is 1.46 times more volatile than Credit Enhanced Corts. It trades about 0.02 of its potential returns per unit of risk. Credit Enhanced Corts is currently generating about 0.03 per unit of risk. If you would invest 2,405 in Strats SM Trust on September 24, 2024 and sell it today you would earn a total of 75.00 from holding Strats SM Trust or generate 3.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 86.75% |
Values | Daily Returns |
Strats SM Trust vs. Credit Enhanced Corts
Performance |
Timeline |
Strats SM Trust |
Credit Enhanced Corts |
Strats SM and Credit Enhanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Strats SM and Credit Enhanced
The main advantage of trading using opposite Strats SM and Credit Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strats SM position performs unexpectedly, Credit Enhanced 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 Credit Enhanced will offset losses from the drop in Credit Enhanced's long position.Strats SM vs. STRATSSM Certificates series | Strats SM vs. Aquagold International | Strats SM vs. Morningstar Unconstrained Allocation | Strats SM vs. Thrivent High Yield |
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Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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