Correlation Between FT Vest and ESGL Holdings

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

By analyzing existing cross correlation between FT Vest Equity and ESGL Holdings Limited, you can compare the effects of market volatilities on FT Vest and ESGL Holdings 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 FT Vest with a short position of ESGL Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and ESGL Holdings.

Diversification Opportunities for FT Vest and ESGL Holdings

-0.33

Correlation Coefficient

FT Vest  ESGL Holdings

Very good diversification

The 3 months correlation between DHDG and ESGL is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and ESGL Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGL Holdings Limited and FT Vest 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 FT Vest Equity are associated (or correlated) with ESGL Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGL Holdings Limited has no effect on the direction of FT Vest i.e., FT Vest and ESGL Holdings go up and down completely randomly.

Pair Corralation between FT Vest and ESGL Holdings

Given the investment horizon of 90 days FT Vest Equity is expected to under-perform the ESGL Holdings. But the etf apears to be less risky and, when comparing its historical volatility, FT Vest Equity is 9.08 times less risky than ESGL Holdings. The etf trades about -0.01 of its potential returns per unit of risk. The ESGL Holdings Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  135.00  in ESGL Holdings Limited on September 28, 2024 and sell it today you would lose (1.00) from holding ESGL Holdings Limited or give up 0.74% of portfolio value over 90 days.

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

FT Vest Equity  vs.  ESGL Holdings Limited

FT Vest Equity

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Equity are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, FT Vest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ESGL Holdings Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESGL Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Etf's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Pair Trading with FT Vest and ESGL Holdings

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

The idea behind FT Vest Equity and ESGL Holdings Limited 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.