Correlation Between Esoterica NextG and TrueShares Technology

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

By analyzing existing cross correlation between Esoterica NextG Economy and TrueShares Technology AI, you can compare the effects of market volatilities on Esoterica NextG and TrueShares Technology 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 Esoterica NextG with a short position of TrueShares Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esoterica NextG and TrueShares Technology.

Diversification Opportunities for Esoterica NextG and TrueShares Technology

0.83

Correlation Coefficient

Esoterica NextG  TrueShares Technology

Very poor diversification

The 3 months correlation between Esoterica and TrueShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Esoterica NextG Economy and TrueShares Technology AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueShares Technology and Esoterica NextG 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 Esoterica NextG Economy are associated (or correlated) with TrueShares Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueShares Technology has no effect on the direction of Esoterica NextG i.e., Esoterica NextG and TrueShares Technology go up and down completely randomly.

Pair Corralation between Esoterica NextG and TrueShares Technology

Given the investment horizon of 90 days Esoterica NextG Economy is expected to generate 0.84 times more return on investment than TrueShares Technology. However, Esoterica NextG Economy is 1.19 times less risky than TrueShares Technology. It trades about -0.05 of its potential returns per unit of risk. TrueShares Technology AI is currently generating about -0.06 per unit of risk. If you would invest  7,421  in Esoterica NextG Economy on December 23, 2024 and sell it today you would lose (496.00) from holding Esoterica NextG Economy or give up 6.68% of portfolio value over 90 days.

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

Esoterica NextG Economy  vs.  TrueShares Technology AI

Esoterica NextG Economy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esoterica NextG Economy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Esoterica NextG is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

TrueShares Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueShares Technology AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Esoterica NextG and TrueShares Technology

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

The idea behind Esoterica NextG Economy and TrueShares Technology AI 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.