Correlation Between Siren DIVCON and OShares Quality

Can any of the company-specific risk be diversified away by investing in both Siren DIVCON and OShares Quality 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 Quality 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 Quality Dividend, you can compare the effects of market volatilities on Siren DIVCON and OShares Quality 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 Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siren DIVCON and OShares Quality.

Diversification Opportunities for Siren DIVCON and OShares Quality

0.75

Correlation Coefficient

Siren DIVCON  OShares Quality

Poor diversification

The 3 months correlation between Siren and OShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Siren DIVCON Leaders and OShares Quality Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OShares Quality Dividend 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 Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OShares Quality Dividend has no effect on the direction of Siren DIVCON i.e., Siren DIVCON and OShares Quality go up and down completely randomly.

Pair Corralation between Siren DIVCON and OShares Quality

Given the investment horizon of 90 days Siren DIVCON is expected to generate 1.2 times less return on investment than OShares Quality. In addition to that, Siren DIVCON is 1.37 times more volatile than OShares Quality Dividend. It trades about 0.06 of its total potential returns per unit of risk. OShares Quality Dividend is currently generating about 0.1 per unit of volatility. If you would invest  4,924  in OShares Quality Dividend on September 29, 2024 and sell it today you would earn a total of  436.00  from holding OShares Quality Dividend or generate 8.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Siren DIVCON Leaders  vs.  OShares Quality Dividend

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 Quality Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OShares Quality Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, OShares Quality is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Siren DIVCON and OShares Quality

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

The idea behind Siren DIVCON Leaders and OShares Quality Dividend 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.