Correlation Between Siren DIVCON and OShares Global

Can any of the company-specific risk be diversified away by investing in both Siren DIVCON and OShares Global 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 Siren DIVCON and OShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Siren DIVCON Leaders and OShares Global Internet, you can compare the effects of market volatilities on Siren DIVCON and OShares Global 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 Siren DIVCON with a short position of OShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siren DIVCON and OShares Global.

Diversification Opportunities for Siren DIVCON and OShares Global

0.3

Correlation Coefficient

Siren DIVCON  OShares Global

Weak diversification

The 3 months correlation between Siren and OShares is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Siren DIVCON Leaders and OShares Global Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OShares Global Internet and Siren DIVCON 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 Siren DIVCON Leaders are associated (or correlated) with OShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OShares Global Internet has no effect on the direction of Siren DIVCON i.e., Siren DIVCON and OShares Global go up and down completely randomly.

Pair Corralation between Siren DIVCON and OShares Global

Given the investment horizon of 90 days Siren DIVCON is expected to generate 2.53 times less return on investment than OShares Global. But when comparing it to its historical volatility, Siren DIVCON Leaders is 1.39 times less risky than OShares Global. It trades about 0.06 of its potential returns per unit of risk. OShares Global Internet is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,945  in OShares Global Internet on September 29, 2024 and sell it today you would earn a total of  744.00  from holding OShares Global Internet or generate 18.86% return on investment over 90 days.

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

Siren DIVCON Leaders  vs.  OShares Global Internet

Siren DIVCON Leaders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siren DIVCON Leaders has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Siren DIVCON is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

OShares Global Internet

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OShares Global Internet are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting forward indicators, OShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Siren DIVCON and OShares Global

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

The idea behind Siren DIVCON Leaders and OShares Global Internet 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.