Correlation Between OShares Europe and Siren DIVCON

Can any of the company-specific risk be diversified away by investing in both OShares Europe and Siren DIVCON 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 OShares Europe and Siren DIVCON into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OShares Europe Quality and Siren DIVCON Leaders, you can compare the effects of market volatilities on OShares Europe and Siren DIVCON 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 OShares Europe with a short position of Siren DIVCON. Check out your portfolio center. Please also check ongoing floating volatility patterns of OShares Europe and Siren DIVCON.

Diversification Opportunities for OShares Europe and Siren DIVCON

0.0

Correlation Coefficient

OShares Europe  Siren DIVCON

Pay attention - limited upside

The 3 months correlation between OShares and Siren is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding OShares Europe Quality and Siren DIVCON Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siren DIVCON Leaders and OShares Europe 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 OShares Europe Quality are associated (or correlated) with Siren DIVCON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siren DIVCON Leaders has no effect on the direction of OShares Europe i.e., OShares Europe and Siren DIVCON go up and down completely randomly.

Pair Corralation between OShares Europe and Siren DIVCON

Given the investment horizon of 90 days OShares Europe Quality is expected to under-perform the Siren DIVCON. But the etf apears to be less risky and, when comparing its historical volatility, OShares Europe Quality is 1.01 times less risky than Siren DIVCON. The etf trades about -0.23 of its potential returns per unit of risk. The Siren DIVCON Leaders is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  6,910  in Siren DIVCON Leaders on September 29, 2024 and sell it today you would lose (171.70) from holding Siren DIVCON Leaders or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

OShares Europe Quality  vs.  Siren DIVCON Leaders

OShares Europe Quality

Risk-Adjusted Performance

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Very Weak

Over the last 90 days OShares Europe Quality has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Siren DIVCON Leaders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siren DIVCON Leaders has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Siren DIVCON is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with OShares Europe and Siren DIVCON

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

The idea behind OShares Europe Quality and Siren DIVCON Leaders 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..