Correlation Between ClearShares Ultra and SHP ETF

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

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

Diversification Opportunities for ClearShares Ultra and SHP ETF

-0.69

Correlation Coefficient

ClearShares Ultra  SHP ETF

Excellent diversification

The 3 months correlation between ClearShares and SHP is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ClearShares Ultra Short Maturi and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF Trust and ClearShares Ultra 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 Ultra Short Maturity are associated (or correlated) with SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of ClearShares Ultra i.e., ClearShares Ultra and SHP ETF go up and down completely randomly.

Pair Corralation between ClearShares Ultra and SHP ETF

Given the investment horizon of 90 days ClearShares Ultra Short Maturity is expected to generate 0.06 times more return on investment than SHP ETF. However, ClearShares Ultra Short Maturity is 17.35 times less risky than SHP ETF. It trades about 1.1 of its potential returns per unit of risk. SHP ETF Trust is currently generating about -0.08 per unit of risk. If you would invest  9,911  in ClearShares Ultra Short Maturity on September 13, 2024 and sell it today you would earn a total of  114.00  from holding ClearShares Ultra Short Maturity or generate 1.15% return on investment over 90 days.

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

ClearShares Ultra Short Maturi  vs.  SHP ETF Trust

ClearShares Ultra Short

Risk-Adjusted Performance

86 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in ClearShares Ultra Short Maturity are ranked lower than 86 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ClearShares Ultra is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

SHP ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHP ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, SHP ETF is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ClearShares Ultra and SHP ETF

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

The idea behind ClearShares Ultra Short Maturity and SHP ETF 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.