Correlation Between ETFS Ultra and ETFS Enhanced

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

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

Diversification Opportunities for ETFS Ultra and ETFS Enhanced

0.0

Correlation Coefficient

ETFS Ultra  ETFS Enhanced

Pay attention - limited upside

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

Pair Corralation between ETFS Ultra and ETFS Enhanced

If you would invest  143.00  in ETFS Ultra Short on September 3, 2024 and sell it today you would earn a total of  2,286  from holding ETFS Ultra Short or generate 1598.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ETFS Ultra Short  vs.  ETFS Enhanced USD

ETFS Ultra Short

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETFS Ultra Short are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ETFS Ultra unveiled solid returns over the last few months and may actually be approaching a breakup point.

ETFS Enhanced USD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ETFS Ultra and ETFS Enhanced

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

The idea behind ETFS Ultra Short and ETFS Enhanced USD 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.