Correlation Between Two Roads and Exchange Listed

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

By analyzing existing cross correlation between Two Roads Shared and Exchange Listed Funds, you can compare the effects of market volatilities on Two Roads and Exchange Listed 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 Two Roads with a short position of Exchange Listed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Two Roads and Exchange Listed.

Diversification Opportunities for Two Roads and Exchange Listed

0.95

Correlation Coefficient

Two Roads  Exchange Listed

Almost no diversification

The 3 months correlation between Two and Exchange is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Two Roads Shared and Exchange Listed Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Listed Funds and Two Roads 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 Two Roads Shared are associated (or correlated) with Exchange Listed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Listed Funds has no effect on the direction of Two Roads i.e., Two Roads and Exchange Listed go up and down completely randomly.

Pair Corralation between Two Roads and Exchange Listed

Given the investment horizon of 90 days Two Roads Shared is expected to under-perform the Exchange Listed. In addition to that, Two Roads is 1.34 times more volatile than Exchange Listed Funds. It trades about -0.23 of its total potential returns per unit of risk. Exchange Listed Funds is currently generating about -0.21 per unit of volatility. If you would invest  8,160  in Exchange Listed Funds on October 8, 2024 and sell it today you would lose (294.00) from holding Exchange Listed Funds or give up 3.6% of portfolio value over 90 days.

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

Two Roads Shared  vs.  Exchange Listed Funds

Two Roads Shared

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Two Roads Shared are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Two Roads is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Exchange Listed Funds

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Exchange Listed Funds are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Exchange Listed is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Two Roads and Exchange Listed

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

The idea behind Two Roads Shared and Exchange Listed Funds 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.