Correlation Between Strats Trust and Strats SM

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

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

Diversification Opportunities for Strats Trust and Strats SM

-0.05

Correlation Coefficient

Strats Trust  Strats SM

Good diversification

The 3 months correlation between Strats and Strats is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Strats Trust Cellular and Strats SM Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats SM Trust and Strats Trust 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 Strats Trust Cellular are associated (or correlated) with Strats SM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats SM Trust has no effect on the direction of Strats Trust i.e., Strats Trust and Strats SM go up and down completely randomly.

Pair Corralation between Strats Trust and Strats SM

Considering the 90-day investment horizon Strats Trust Cellular is expected to generate 3.45 times more return on investment than Strats SM. However, Strats Trust is 3.45 times more volatile than Strats SM Trust. It trades about 0.04 of its potential returns per unit of risk. Strats SM Trust is currently generating about 0.01 per unit of risk. If you would invest  939.00  in Strats Trust Cellular on September 17, 2024 and sell it today you would earn a total of  37.00  from holding Strats Trust Cellular or generate 3.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Strats Trust Cellular  vs.  Strats SM Trust

Strats Trust Cellular

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strats Trust Cellular are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking indicators, Strats Trust is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Strats SM Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Strats Trust and Strats SM

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

The idea behind Strats Trust Cellular and Strats SM Trust 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.