Correlation Between Freedom Day and T Rex

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

By analyzing existing cross correlation between Freedom Day Dividend and T Rex 2X Long, you can compare the effects of market volatilities on Freedom Day and T Rex 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 Freedom Day with a short position of T Rex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Day and T Rex.

Diversification Opportunities for Freedom Day and T Rex

0.5

Correlation Coefficient

Freedom Day  T Rex

Very weak diversification

The 3 months correlation between Freedom and NVDX is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Day Dividend and T Rex 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rex 2X and Freedom Day 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 Freedom Day Dividend are associated (or correlated) with T Rex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rex 2X has no effect on the direction of Freedom Day i.e., Freedom Day and T Rex go up and down completely randomly.

Pair Corralation between Freedom Day and T Rex

Given the investment horizon of 90 days Freedom Day is expected to generate 7.51 times less return on investment than T Rex. But when comparing it to its historical volatility, Freedom Day Dividend is 7.07 times less risky than T Rex. It trades about 0.07 of its potential returns per unit of risk. T Rex 2X Long is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,416  in T Rex 2X Long on August 30, 2024 and sell it today you would earn a total of  254.00  from holding T Rex 2X Long or generate 17.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Freedom Day Dividend  vs.  T Rex 2X Long

Freedom Day Dividend

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Day Dividend are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

T Rex 2X

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T Rex 2X Long are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, T Rex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freedom Day and T Rex

The main advantage of trading using opposite Freedom Day and T Rex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Day position performs unexpectedly, T Rex 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 T Rex will offset losses from the drop in T Rex's long position.

The idea behind Freedom Day Dividend and T Rex 2X Long 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.