Correlation Between Freedom Day and DoubleLine Shiller

Can any of the company-specific risk be diversified away by investing in both Freedom Day and DoubleLine Shiller 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 DoubleLine Shiller 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 DoubleLine Shiller CAPE, you can compare the effects of market volatilities on Freedom Day and DoubleLine Shiller 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 DoubleLine Shiller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Day and DoubleLine Shiller.

Diversification Opportunities for Freedom Day and DoubleLine Shiller

0.58

Correlation Coefficient

Freedom Day  DoubleLine Shiller

Very weak diversification

The 3 months correlation between Freedom and DoubleLine is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Day Dividend and DoubleLine Shiller CAPE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoubleLine Shiller CAPE 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 DoubleLine Shiller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoubleLine Shiller CAPE has no effect on the direction of Freedom Day i.e., Freedom Day and DoubleLine Shiller go up and down completely randomly.

Pair Corralation between Freedom Day and DoubleLine Shiller

Given the investment horizon of 90 days Freedom Day Dividend is expected to under-perform the DoubleLine Shiller. In addition to that, Freedom Day is 1.16 times more volatile than DoubleLine Shiller CAPE. It trades about -0.4 of its total potential returns per unit of risk. DoubleLine Shiller CAPE is currently generating about -0.33 per unit of volatility. If you would invest  3,182  in DoubleLine Shiller CAPE on September 25, 2024 and sell it today you would lose (152.00) from holding DoubleLine Shiller CAPE or give up 4.78% of portfolio value over 90 days.

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

Freedom Day Dividend  vs.  DoubleLine Shiller CAPE

Freedom Day Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Day Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

DoubleLine Shiller CAPE

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DoubleLine Shiller CAPE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, DoubleLine Shiller is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Freedom Day and DoubleLine Shiller

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

The idea behind Freedom Day Dividend and DoubleLine Shiller CAPE 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.

Check out your portfolio center.

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.