Correlation Between PowerShares and PowerShares High

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

By analyzing existing cross correlation between PowerShares and PowerShares High Growth, you can compare the effects of market volatilities on PowerShares and PowerShares High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of PowerShares and PowerShares High.

Diversification Opportunities for PowerShares and PowerShares High

0.0

Correlation Coefficient

PowerShares  PowerShares High

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 High Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerShares High Growth 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerShares High Growth has no effect on the direction of PowerShares i.e., PowerShares and PowerShares High go up and down completely randomly.

Pair Corralation between PowerShares and PowerShares High

If you would invest (100.00) in PowerShares High Growth on September 16, 2024 and sell it today you would earn a total of  100.00  from holding PowerShares High Growth 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 High Growth

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 High Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PowerShares High Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical indicators, PowerShares High is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with PowerShares and PowerShares High

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

The idea behind PowerShares and PowerShares High Growth 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.