Correlation Between PowerShares Global and PowerShares Active

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

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

Diversification Opportunities for PowerShares Global and PowerShares Active

0.0

Correlation Coefficient

PowerShares Global  PowerShares Active

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

Pair Corralation between PowerShares Global and PowerShares Active

If you would invest  34,243  in PowerShares Global Funds on September 26, 2024 and sell it today you would earn a total of  2,639  from holding PowerShares Global Funds or generate 7.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PowerShares Global Funds  vs.  PowerShares Active Mega

PowerShares Global Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PowerShares Global Funds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PowerShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PowerShares Active Mega

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PowerShares Global and PowerShares Active

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

The idea behind PowerShares Global Funds and PowerShares Active Mega 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.