Correlation Between Freedom Day and Capitol Series

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

By analyzing existing cross correlation between Freedom Day Dividend and Capitol Series Trust, you can compare the effects of market volatilities on Freedom Day and Capitol Series 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 Freedom Day with a short position of Capitol Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Day and Capitol Series.

Diversification Opportunities for Freedom Day and Capitol Series

0.77

Correlation Coefficient

Freedom Day  Capitol Series

Poor diversification

The 3 months correlation between Freedom and Capitol is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Day Dividend and Capitol Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Series Trust and Freedom Day 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 Freedom Day Dividend are associated (or correlated) with Capitol Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Series Trust has no effect on the direction of Freedom Day i.e., Freedom Day and Capitol Series go up and down completely randomly.

Pair Corralation between Freedom Day and Capitol Series

Given the investment horizon of 90 days Freedom Day is expected to generate 138.54 times less return on investment than Capitol Series. But when comparing it to its historical volatility, Freedom Day Dividend is 41.16 times less risky than Capitol Series. It trades about 0.04 of its potential returns per unit of risk. Capitol Series Trust is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,686  in Capitol Series Trust on September 17, 2024 and sell it today you would earn a total of  7,494  from holding Capitol Series Trust or generate 279.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Freedom Day Dividend  vs.  Capitol Series Trust

Freedom Day Dividend

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Day Dividend are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Capitol Series Trust

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Series Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Capitol Series exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freedom Day and Capitol Series

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

The idea behind Freedom Day Dividend and Capitol Series Trust 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.