Correlation Between ETFS Ultra and ETFS ROBO

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

By analyzing existing cross correlation between ETFS Ultra Long and ETFS ROBO Global, you can compare the effects of market volatilities on ETFS Ultra and ETFS ROBO 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 ETFS Ultra with a short position of ETFS ROBO. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Ultra and ETFS ROBO.

Diversification Opportunities for ETFS Ultra and ETFS ROBO

0.89

Correlation Coefficient

ETFS Ultra  ETFS ROBO

Very poor diversification

The 3 months correlation between ETFS and ETFS is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Ultra Long and ETFS ROBO Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS ROBO Global and ETFS Ultra 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 ETFS Ultra Long are associated (or correlated) with ETFS ROBO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS ROBO Global has no effect on the direction of ETFS Ultra i.e., ETFS Ultra and ETFS ROBO go up and down completely randomly.

Pair Corralation between ETFS Ultra and ETFS ROBO

Assuming the 90 days trading horizon ETFS Ultra Long is expected to under-perform the ETFS ROBO. In addition to that, ETFS Ultra is 2.74 times more volatile than ETFS ROBO Global. It trades about -0.11 of its total potential returns per unit of risk. ETFS ROBO Global is currently generating about -0.09 per unit of volatility. If you would invest  8,014  in ETFS ROBO Global on December 29, 2024 and sell it today you would lose (524.00) from holding ETFS ROBO Global or give up 6.54% of portfolio value over 90 days.

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

ETFS Ultra Long  vs.  ETFS ROBO Global

ETFS Ultra Long

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETFS Ultra Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

ETFS ROBO Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETFS ROBO Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic 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.

Pair Trading with ETFS Ultra and ETFS ROBO

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

The idea behind ETFS Ultra Long and ETFS ROBO Global 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.