Correlation Between ETRACS Quarterly and DB Base

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

By analyzing existing cross correlation between ETRACS Quarterly Pay and DB Base Metals, you can compare the effects of market volatilities on ETRACS Quarterly and DB Base 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 ETRACS Quarterly with a short position of DB Base. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Quarterly and DB Base.

Diversification Opportunities for ETRACS Quarterly and DB Base

-0.67

Correlation Coefficient

ETRACS Quarterly  DB Base

Excellent diversification

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

Pair Corralation between ETRACS Quarterly and DB Base

Given the investment horizon of 90 days ETRACS Quarterly Pay is expected to generate 0.54 times more return on investment than DB Base. However, ETRACS Quarterly Pay is 1.86 times less risky than DB Base. It trades about 0.09 of its potential returns per unit of risk. DB Base Metals is currently generating about -0.05 per unit of risk. If you would invest  3,587  in ETRACS Quarterly Pay on October 11, 2024 and sell it today you would earn a total of  2,613  from holding ETRACS Quarterly Pay or generate 72.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	25.66%
Values	Daily Returns

ETRACS Quarterly Pay  vs.  DB Base Metals

ETRACS Quarterly Pay

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS Quarterly Pay are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ETRACS Quarterly may actually be approaching a critical reversion point that can send shares even higher in February 2025.

DB Base Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DB Base Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DB Base is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ETRACS Quarterly and DB Base

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

The idea behind ETRACS Quarterly Pay and DB Base Metals 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.