Correlation Between Capitol Series and FT Vest

Can any of the company-specific risk be diversified away by investing in both Capitol Series and FT Vest 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 Capitol Series and FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capitol Series Trust and FT Vest Equity, you can compare the effects of market volatilities on Capitol Series and FT Vest 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 Capitol Series with a short position of FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Series and FT Vest.

Diversification Opportunities for Capitol Series and FT Vest

0.72

Correlation Coefficient

Capitol Series  FT Vest

Poor diversification

The 3 months correlation between Capitol and DHDG is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Series Trust and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity and Capitol Series 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 Capitol Series Trust are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of Capitol Series i.e., Capitol Series and FT Vest go up and down completely randomly.

Pair Corralation between Capitol Series and FT Vest

Given the investment horizon of 90 days Capitol Series Trust is expected to under-perform the FT Vest. In addition to that, Capitol Series is 1.52 times more volatile than FT Vest Equity. It trades about -0.12 of its total potential returns per unit of risk. FT Vest Equity is currently generating about -0.09 per unit of volatility. If you would invest  3,110  in FT Vest Equity on October 9, 2024 and sell it today you would lose (34.00) from holding FT Vest Equity or give up 1.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Capitol Series Trust  vs.  FT Vest Equity

Capitol Series Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Series Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Capitol Series is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FT Vest Equity

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Equity are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, FT Vest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Capitol Series and FT Vest

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

The idea behind Capitol Series Trust and FT Vest Equity 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.