Correlation Between TrueShares Technology and Esoterica NextG

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

By analyzing existing cross correlation between TrueShares Technology AI and Esoterica NextG Economy, you can compare the effects of market volatilities on TrueShares Technology and Esoterica NextG 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 TrueShares Technology with a short position of Esoterica NextG. Check out your portfolio center. Please also check ongoing floating volatility patterns of TrueShares Technology and Esoterica NextG.

Diversification Opportunities for TrueShares Technology and Esoterica NextG

0.67

Correlation Coefficient

TrueShares Technology  Esoterica NextG

Poor diversification

The 3 months correlation between TrueShares and Esoterica is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding TrueShares Technology AI and Esoterica NextG Economy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esoterica NextG Economy and TrueShares Technology 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 TrueShares Technology AI are associated (or correlated) with Esoterica NextG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esoterica NextG Economy has no effect on the direction of TrueShares Technology i.e., TrueShares Technology and Esoterica NextG go up and down completely randomly.

Pair Corralation between TrueShares Technology and Esoterica NextG

Given the investment horizon of 90 days TrueShares Technology AI is expected to under-perform the Esoterica NextG. In addition to that, TrueShares Technology is 1.18 times more volatile than Esoterica NextG Economy. It trades about -0.09 of its total potential returns per unit of risk. Esoterica NextG Economy is currently generating about -0.04 per unit of volatility. If you would invest  7,380  in Esoterica NextG Economy on December 5, 2024 and sell it today you would lose (326.00) from holding Esoterica NextG Economy or give up 4.42% of portfolio value over 90 days.

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

TrueShares Technology AI  vs.  Esoterica NextG Economy

TrueShares Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueShares Technology AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Esoterica NextG Economy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esoterica NextG Economy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Esoterica NextG is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with TrueShares Technology and Esoterica NextG

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

The idea behind TrueShares Technology AI and Esoterica NextG Economy 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.