Correlation Between ClearShares OCIO and STF Tactical

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

By analyzing existing cross correlation between ClearShares OCIO ETF and STF Tactical Growth, you can compare the effects of market volatilities on ClearShares OCIO and STF Tactical 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 ClearShares OCIO with a short position of STF Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearShares OCIO and STF Tactical.

Diversification Opportunities for ClearShares OCIO and STF Tactical

0.96

Correlation Coefficient

ClearShares OCIO  STF Tactical

Almost no diversification

The 3 months correlation between ClearShares and STF is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding ClearShares OCIO ETF and STF Tactical Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STF Tactical Growth and ClearShares OCIO 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 ClearShares OCIO ETF are associated (or correlated) with STF Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STF Tactical Growth has no effect on the direction of ClearShares OCIO i.e., ClearShares OCIO and STF Tactical go up and down completely randomly.

Pair Corralation between ClearShares OCIO and STF Tactical

Given the investment horizon of 90 days ClearShares OCIO is expected to generate 2.62 times less return on investment than STF Tactical. But when comparing it to its historical volatility, ClearShares OCIO ETF is 1.94 times less risky than STF Tactical. It trades about 0.13 of its potential returns per unit of risk. STF Tactical Growth is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,249  in STF Tactical Growth on September 12, 2024 and sell it today you would earn a total of  364.50  from holding STF Tactical Growth or generate 11.22% return on investment over 90 days.

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

ClearShares OCIO ETF  vs.  STF Tactical Growth

ClearShares OCIO ETF

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ClearShares OCIO ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, ClearShares OCIO is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

STF Tactical Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STF Tactical Growth are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, STF Tactical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ClearShares OCIO and STF Tactical

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

The idea behind ClearShares OCIO ETF and STF Tactical Growth 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.