Correlation Between GREENWICH ASSET and SOVEREIGN TRUST

Can any of the company-specific risk be diversified away by investing in both GREENWICH ASSET and SOVEREIGN TRUST 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 GREENWICH ASSET and SOVEREIGN TRUST into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GREENWICH ASSET ETF and SOVEREIGN TRUST INSURANCE, you can compare the effects of market volatilities on GREENWICH ASSET and SOVEREIGN TRUST 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 GREENWICH ASSET with a short position of SOVEREIGN TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENWICH ASSET and SOVEREIGN TRUST.

Diversification Opportunities for GREENWICH ASSET and SOVEREIGN TRUST

-0.43

Correlation Coefficient

GREENWICH ASSET  SOVEREIGN TRUST

Very good diversification

The 3 months correlation between GREENWICH and SOVEREIGN is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GREENWICH ASSET ETF and SOVEREIGN TRUST INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOVEREIGN TRUST INSURANCE and GREENWICH ASSET 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 GREENWICH ASSET ETF are associated (or correlated) with SOVEREIGN TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOVEREIGN TRUST INSURANCE has no effect on the direction of GREENWICH ASSET i.e., GREENWICH ASSET and SOVEREIGN TRUST go up and down completely randomly.

Pair Corralation between GREENWICH ASSET and SOVEREIGN TRUST

Assuming the 90 days trading horizon GREENWICH ASSET ETF is expected to under-perform the SOVEREIGN TRUST. But the etf apears to be less risky and, when comparing its historical volatility, GREENWICH ASSET ETF is 1.23 times less risky than SOVEREIGN TRUST. The etf trades about -0.17 of its potential returns per unit of risk. The SOVEREIGN TRUST INSURANCE is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  67.00  in SOVEREIGN TRUST INSURANCE on September 10, 2024 and sell it today you would earn a total of  17.00  from holding SOVEREIGN TRUST INSURANCE or generate 25.37% return on investment over 90 days.

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

GREENWICH ASSET ETF  vs.  SOVEREIGN TRUST INSURANCE

GREENWICH ASSET ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GREENWICH ASSET ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

SOVEREIGN TRUST INSURANCE

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SOVEREIGN TRUST INSURANCE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, SOVEREIGN TRUST demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GREENWICH ASSET and SOVEREIGN TRUST

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

The idea behind GREENWICH ASSET ETF and SOVEREIGN TRUST INSURANCE 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.