Correlation Between PowerShares and PowerShares

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

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

Diversification Opportunities for PowerShares and PowerShares

0.0

Correlation Coefficient

PowerShares  PowerShares

Pay attention - limited upside

The 3 months correlation between PowerShares and PowerShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PowerShares and PowerShares DB Crude in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerShares DB Crude and PowerShares 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 PowerShares are associated (or correlated) with PowerShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerShares DB Crude has no effect on the direction of PowerShares i.e., PowerShares and PowerShares go up and down completely randomly.

Pair Corralation between PowerShares and PowerShares

If you would invest (100.00) in PowerShares DB Crude on September 16, 2024 and sell it today you would earn a total of  100.00  from holding PowerShares DB Crude or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PowerShares  vs.  PowerShares DB Crude

PowerShares

Risk-Adjusted Performance

0 of 100

Very Weak

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

PowerShares DB Crude

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PowerShares and PowerShares

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

The idea behind PowerShares and PowerShares DB Crude 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.