Correlation Between SPTSX Dividend and Exemplar Growth

Can any of the company-specific risk be diversified away by investing in both SPTSX Dividend and Exemplar Growth 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 SPTSX Dividend and Exemplar Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPTSX Dividend Aristocrats and Exemplar Growth and, you can compare the effects of market volatilities on SPTSX Dividend and Exemplar Growth 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 SPTSX Dividend with a short position of Exemplar Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPTSX Dividend and Exemplar Growth.

Diversification Opportunities for SPTSX Dividend and Exemplar Growth

-0.25

Correlation Coefficient

SPTSX Dividend  Exemplar Growth

Very good diversification

The 3 months correlation between SPTSX and Exemplar is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SPTSX Dividend Aristocrats and Exemplar Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exemplar Growth and SPTSX Dividend 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 SPTSX Dividend Aristocrats are associated (or correlated) with Exemplar Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exemplar Growth has no effect on the direction of SPTSX Dividend i.e., SPTSX Dividend and Exemplar Growth go up and down completely randomly.

Pair Corralation between SPTSX Dividend and Exemplar Growth

Assuming the 90 days trading horizon SPTSX Dividend Aristocrats is expected to under-perform the Exemplar Growth. In addition to that, SPTSX Dividend is 6.42 times more volatile than Exemplar Growth and. It trades about -0.06 of its total potential returns per unit of risk. Exemplar Growth and is currently generating about 0.24 per unit of volatility. If you would invest  2,256  in Exemplar Growth and on October 22, 2024 and sell it today you would earn a total of  7.00  from holding Exemplar Growth and or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

SPTSX Dividend Aristocrats  vs.  Exemplar Growth and

Pair Trading with SPTSX Dividend and Exemplar Growth

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

The idea behind SPTSX Dividend Aristocrats and Exemplar Growth and 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.