Correlation Between STRATS SM and SYNTHETIC FIXED

Can any of the company-specific risk be diversified away by investing in both STRATS SM and SYNTHETIC FIXED 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 SYNTHETIC FIXED 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 SYNTHETIC FIXED INCOME, you can compare the effects of market volatilities on STRATS SM and SYNTHETIC FIXED 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 SYNTHETIC FIXED. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRATS SM and SYNTHETIC FIXED.

Diversification Opportunities for STRATS SM and SYNTHETIC FIXED

0.0

Correlation Coefficient

STRATS SM  SYNTHETIC FIXED

Pay attention - limited upside

The 3 months correlation between STRATS and SYNTHETIC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding STRATS SM Trust and SYNTHETIC FIXED INCOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYNTHETIC FIXED INCOME 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 SYNTHETIC FIXED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYNTHETIC FIXED INCOME has no effect on the direction of STRATS SM i.e., STRATS SM and SYNTHETIC FIXED go up and down completely randomly.

Pair Corralation between STRATS SM and SYNTHETIC FIXED

If you would invest  2,244  in STRATS SM Trust on December 25, 2024 and sell it today you would earn a total of  24.00  from holding STRATS SM Trust or generate 1.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

STRATS SM Trust  vs.  SYNTHETIC FIXED INCOME

STRATS SM Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STRATS SM Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking indicators, STRATS SM is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SYNTHETIC FIXED INCOME

Risk-Adjusted Performance

Very Weak

Over the last 90 days SYNTHETIC FIXED INCOME has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking indicators, SYNTHETIC FIXED is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with STRATS SM and SYNTHETIC FIXED

The main advantage of trading using opposite STRATS SM and SYNTHETIC FIXED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRATS SM position performs unexpectedly, SYNTHETIC FIXED 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 SYNTHETIC FIXED will offset losses from the drop in SYNTHETIC FIXED's long position.

The idea behind STRATS SM Trust and SYNTHETIC FIXED INCOME 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.