Correlation Between STRATS SM and Greenville Federal

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

Diversification Opportunities for STRATS SM and Greenville Federal

0.09

Correlation Coefficient

STRATS SM  Greenville Federal

Significant diversification

The 3 months correlation between STRATS and Greenville is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding STRATS SM Trust and Greenville Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenville Federal 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 Greenville Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenville Federal has no effect on the direction of STRATS SM i.e., STRATS SM and Greenville Federal go up and down completely randomly.

Pair Corralation between STRATS SM and Greenville Federal

Considering the 90-day investment horizon STRATS SM is expected to generate 1.81 times less return on investment than Greenville Federal. But when comparing it to its historical volatility, STRATS SM Trust is 2.79 times less risky than Greenville Federal. It trades about 0.04 of its potential returns per unit of risk. Greenville Federal Financial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  660.00  in Greenville Federal Financial on October 4, 2024 and sell it today you would earn a total of  55.00  from holding Greenville Federal Financial or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.38%
Values	Daily Returns

STRATS SM Trust  vs.  Greenville Federal Financial

STRATS SM Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRATS SM Trust has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Greenville Federal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenville Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Greenville Federal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with STRATS SM and Greenville Federal

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

The idea behind STRATS SM Trust and Greenville Federal Financial 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.