Correlation Between TrueShares Structured and Strategy Shares

Can any of the company-specific risk be diversified away by investing in both TrueShares Structured and Strategy Shares 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 TrueShares Structured and Strategy Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TrueShares Structured Outcome and Strategy Shares NewfoundReSolve, you can compare the effects of market volatilities on TrueShares Structured and Strategy Shares 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 TrueShares Structured with a short position of Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of TrueShares Structured and Strategy Shares.

Diversification Opportunities for TrueShares Structured and Strategy Shares

0.99

Correlation Coefficient

TrueShares Structured  Strategy Shares

No risk reduction

The 3 months correlation between TrueShares and Strategy is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding TrueShares Structured Outcome and Strategy Shares NewfoundReSolv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares Newf and TrueShares Structured 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 TrueShares Structured Outcome are associated (or correlated) with Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares Newf has no effect on the direction of TrueShares Structured i.e., TrueShares Structured and Strategy Shares go up and down completely randomly.

Pair Corralation between TrueShares Structured and Strategy Shares

Given the investment horizon of 90 days TrueShares Structured Outcome is expected to generate 0.77 times more return on investment than Strategy Shares. However, TrueShares Structured Outcome is 1.29 times less risky than Strategy Shares. It trades about -0.05 of its potential returns per unit of risk. Strategy Shares NewfoundReSolve is currently generating about -0.04 per unit of risk. If you would invest  3,883  in TrueShares Structured Outcome on October 10, 2024 and sell it today you would lose (49.00) from holding TrueShares Structured Outcome or give up 1.26% of portfolio value over 90 days.

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

TrueShares Structured Outcome  vs.  Strategy Shares NewfoundReSolv

TrueShares Structured

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TrueShares Structured Outcome are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, TrueShares Structured is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Strategy Shares Newf

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares NewfoundReSolve are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Strategy Shares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TrueShares Structured and Strategy Shares

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

The idea behind TrueShares Structured Outcome and Strategy Shares NewfoundReSolve 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.