Correlation Between STF Tactical and ClearShares OCIO

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

By analyzing existing cross correlation between STF Tactical Growth and ClearShares OCIO ETF, you can compare the effects of market volatilities on STF Tactical and ClearShares OCIO 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 STF Tactical with a short position of ClearShares OCIO. Check out your portfolio center. Please also check ongoing floating volatility patterns of STF Tactical and ClearShares OCIO.

Diversification Opportunities for STF Tactical and ClearShares OCIO

0.9

Correlation Coefficient

STF Tactical  ClearShares OCIO

Almost no diversification

The 3 months correlation between STF and ClearShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding STF Tactical Growth and ClearShares OCIO ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearShares OCIO ETF and STF Tactical 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 STF Tactical Growth are associated (or correlated) with ClearShares OCIO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearShares OCIO ETF has no effect on the direction of STF Tactical i.e., STF Tactical and ClearShares OCIO go up and down completely randomly.

Pair Corralation between STF Tactical and ClearShares OCIO

Considering the 90-day investment horizon STF Tactical Growth is expected to under-perform the ClearShares OCIO. In addition to that, STF Tactical is 1.75 times more volatile than ClearShares OCIO ETF. It trades about -0.07 of its total potential returns per unit of risk. ClearShares OCIO ETF is currently generating about -0.05 per unit of volatility. If you would invest  3,411  in ClearShares OCIO ETF on December 28, 2024 and sell it today you would lose (87.00) from holding ClearShares OCIO ETF or give up 2.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

STF Tactical Growth  vs.  ClearShares OCIO ETF

STF Tactical Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days STF Tactical Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, STF Tactical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ClearShares OCIO ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days ClearShares OCIO ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, ClearShares OCIO is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with STF Tactical and ClearShares OCIO

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

The idea behind STF Tactical Growth and ClearShares OCIO ETF 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.