Correlation Between IPath Series and DSJA

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

By analyzing existing cross correlation between iPath Series B and DSJA, you can compare the effects of market volatilities on IPath Series and DSJA 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 IPath Series with a short position of DSJA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Series and DSJA.

Diversification Opportunities for IPath Series and DSJA

-0.23

Correlation Coefficient

IPath Series  DSJA

Very good diversification

The 3 months correlation between IPath and DSJA is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B and DSJA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSJA and IPath Series 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 iPath Series B are associated (or correlated) with DSJA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSJA has no effect on the direction of IPath Series i.e., IPath Series and DSJA go up and down completely randomly.

Pair Corralation between IPath Series and DSJA

If you would invest  4,450  in iPath Series B on August 30, 2024 and sell it today you would lose (105.00) from holding iPath Series B or give up 2.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

iPath Series B  vs.  DSJA

iPath Series B

Risk-Adjusted Performance

1 of 100

Very Weak

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

DSJA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSJA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, DSJA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IPath Series and DSJA

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

The idea behind iPath Series B and DSJA 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.