Correlation Between International Drawdown and Main Buywrite

Can any of the company-specific risk be diversified away by investing in both International Drawdown and Main Buywrite 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 International Drawdown and Main Buywrite into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International Drawdown Managed and Main Buywrite ETF, you can compare the effects of market volatilities on International Drawdown and Main Buywrite 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 International Drawdown with a short position of Main Buywrite. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Drawdown and Main Buywrite.

Diversification Opportunities for International Drawdown and Main Buywrite

-0.34

Correlation Coefficient

International Drawdown  Main Buywrite

Very good diversification

The 3 months correlation between International and Main is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding International Drawdown Managed and Main Buywrite ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Buywrite ETF and International Drawdown 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 International Drawdown Managed are associated (or correlated) with Main Buywrite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Buywrite ETF has no effect on the direction of International Drawdown i.e., International Drawdown and Main Buywrite go up and down completely randomly.

Pair Corralation between International Drawdown and Main Buywrite

Given the investment horizon of 90 days International Drawdown is expected to generate 2.62 times less return on investment than Main Buywrite. In addition to that, International Drawdown is 3.36 times more volatile than Main Buywrite ETF. It trades about 0.02 of its total potential returns per unit of risk. Main Buywrite ETF is currently generating about 0.16 per unit of volatility. If you would invest  1,371  in Main Buywrite ETF on September 13, 2024 and sell it today you would earn a total of  30.00  from holding Main Buywrite ETF or generate 2.19% return on investment over 90 days.

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

International Drawdown Managed  vs.  Main Buywrite ETF

International Drawdown

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in International Drawdown Managed are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, International Drawdown is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Main Buywrite ETF

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Main Buywrite ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Main Buywrite is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with International Drawdown and Main Buywrite

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

The idea behind International Drawdown Managed and Main Buywrite ETF 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.