Correlation Between ETFS Morningstar and ETFS Battery

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

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

Diversification Opportunities for ETFS Morningstar and ETFS Battery

0.62

Correlation Coefficient

ETFS Morningstar  ETFS Battery

Poor diversification

The 3 months correlation between ETFS and ETFS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Morningstar Global and ETFS Battery Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Battery Tech and ETFS Morningstar 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 Morningstar Global are associated (or correlated) with ETFS Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Battery Tech has no effect on the direction of ETFS Morningstar i.e., ETFS Morningstar and ETFS Battery go up and down completely randomly.

Pair Corralation between ETFS Morningstar and ETFS Battery

Assuming the 90 days trading horizon ETFS Morningstar Global is expected to under-perform the ETFS Battery. But the etf apears to be less risky and, when comparing its historical volatility, ETFS Morningstar Global is 1.02 times less risky than ETFS Battery. The etf trades about -0.07 of its potential returns per unit of risk. The ETFS Battery Tech is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  8,871  in ETFS Battery Tech on December 29, 2024 and sell it today you would lose (361.00) from holding ETFS Battery Tech or give up 4.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

ETFS Morningstar Global  vs.  ETFS Battery Tech

ETFS Morningstar Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETFS Morningstar Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ETFS Morningstar is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ETFS Battery Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETFS Battery Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ETFS Battery is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ETFS Morningstar and ETFS Battery

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

The idea behind ETFS Morningstar Global and ETFS Battery Tech 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.