Correlation Between Saba Capital and FT Cboe

Can any of the company-specific risk be diversified away by investing in both Saba Capital and FT Cboe 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 Saba Capital and FT Cboe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Saba Capital Income and FT Cboe Vest, you can compare the effects of market volatilities on Saba Capital and FT Cboe 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 Saba Capital with a short position of FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saba Capital and FT Cboe.

Diversification Opportunities for Saba Capital and FT Cboe

0.89

Correlation Coefficient

Saba Capital  FT Cboe

Very poor diversification

The 3 months correlation between Saba and BUFQ is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Saba Capital Income and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest and Saba Capital 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 Saba Capital Income are associated (or correlated) with FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Saba Capital i.e., Saba Capital and FT Cboe go up and down completely randomly.

Pair Corralation between Saba Capital and FT Cboe

Given the investment horizon of 90 days Saba Capital Income is expected to generate 2.49 times more return on investment than FT Cboe. However, Saba Capital is 2.49 times more volatile than FT Cboe Vest. It trades about 0.13 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.16 per unit of risk. If you would invest  864.00  in Saba Capital Income on September 22, 2024 and sell it today you would earn a total of  25.00  from holding Saba Capital Income or generate 2.89% return on investment over 90 days.

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

Saba Capital Income  vs.  FT Cboe Vest

Saba Capital Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saba Capital Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, Saba Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FT Cboe Vest

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Saba Capital and FT Cboe

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

The idea behind Saba Capital Income and FT Cboe Vest 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.