Correlation Between Exchange Traded and Collaborative Investment

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

By analyzing existing cross correlation between Exchange Traded Concepts and Collaborative Investment Series, you can compare the effects of market volatilities on Exchange Traded and Collaborative Investment 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 Exchange Traded with a short position of Collaborative Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Traded and Collaborative Investment.

Diversification Opportunities for Exchange Traded and Collaborative Investment

0.68

Correlation Coefficient

Exchange Traded  Collaborative Investment

Poor diversification

The 3 months correlation between Exchange and Collaborative is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Traded Concepts and Collaborative Investment Serie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collaborative Investment and Exchange Traded 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 Exchange Traded Concepts are associated (or correlated) with Collaborative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collaborative Investment has no effect on the direction of Exchange Traded i.e., Exchange Traded and Collaborative Investment go up and down completely randomly.

Pair Corralation between Exchange Traded and Collaborative Investment

If you would invest  2,177  in Collaborative Investment Series on September 14, 2024 and sell it today you would earn a total of  24.00  from holding Collaborative Investment Series or generate 1.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Exchange Traded Concepts  vs.  Collaborative Investment Serie

Exchange Traded Concepts

Risk-Adjusted Performance

0 of 100

Very Weak

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

Collaborative Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Collaborative Investment Series are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Collaborative Investment is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Exchange Traded and Collaborative Investment

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

The idea behind Exchange Traded Concepts and Collaborative Investment Series 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.