Correlation Between IREIT MarketVector and Tradr 2X

Can any of the company-specific risk be diversified away by investing in both IREIT MarketVector and Tradr 2X 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 IREIT MarketVector and Tradr 2X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iREIT MarketVector and Tradr 2X Long, you can compare the effects of market volatilities on IREIT MarketVector and Tradr 2X 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 IREIT MarketVector with a short position of Tradr 2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IREIT MarketVector and Tradr 2X.

Diversification Opportunities for IREIT MarketVector and Tradr 2X

0.15

Correlation Coefficient

IREIT MarketVector  Tradr 2X

Average diversification

The 3 months correlation between IREIT and Tradr is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding iREIT MarketVector and Tradr 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradr 2X Long and IREIT MarketVector 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 iREIT MarketVector are associated (or correlated) with Tradr 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradr 2X Long has no effect on the direction of IREIT MarketVector i.e., IREIT MarketVector and Tradr 2X go up and down completely randomly.

Pair Corralation between IREIT MarketVector and Tradr 2X

Given the investment horizon of 90 days iREIT MarketVector is expected to under-perform the Tradr 2X. But the etf apears to be less risky and, when comparing its historical volatility, iREIT MarketVector is 2.3 times less risky than Tradr 2X. The etf trades about -0.13 of its potential returns per unit of risk. The Tradr 2X Long is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,808  in Tradr 2X Long on November 28, 2024 and sell it today you would lose (11.00) from holding Tradr 2X Long or give up 0.39% of portfolio value over 90 days.

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

iREIT MarketVector  vs.  Tradr 2X Long

iREIT MarketVector

Risk-Adjusted Performance

Very Weak

Over the last 90 days iREIT MarketVector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Tradr 2X Long

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tradr 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tradr 2X is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IREIT MarketVector and Tradr 2X

The main advantage of trading using opposite IREIT MarketVector and Tradr 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IREIT MarketVector position performs unexpectedly, Tradr 2X 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 Tradr 2X will offset losses from the drop in Tradr 2X's long position.

The idea behind iREIT MarketVector and Tradr 2X Long 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 Anywhere module to track or share privately all of your investments from the convenience of any device.