Correlation Between Ballast SmallMid and ETF Series

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

By analyzing existing cross correlation between Ballast SmallMid Cap and ETF Series Solutions, you can compare the effects of market volatilities on Ballast SmallMid and ETF Series 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 Ballast SmallMid with a short position of ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballast SmallMid and ETF Series.

Diversification Opportunities for Ballast SmallMid and ETF Series

-0.58

Correlation Coefficient

Ballast SmallMid  ETF Series

Excellent diversification

The 3 months correlation between Ballast and ETF is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ballast SmallMid Cap and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions and Ballast SmallMid 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 Ballast SmallMid Cap are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Ballast SmallMid i.e., Ballast SmallMid and ETF Series go up and down completely randomly.

Pair Corralation between Ballast SmallMid and ETF Series

Given the investment horizon of 90 days Ballast SmallMid Cap is expected to generate 1.26 times more return on investment than ETF Series. However, Ballast SmallMid is 1.26 times more volatile than ETF Series Solutions. It trades about 0.18 of its potential returns per unit of risk. ETF Series Solutions is currently generating about -0.08 per unit of risk. If you would invest  3,802  in Ballast SmallMid Cap on August 30, 2024 and sell it today you would earn a total of  584.00  from holding Ballast SmallMid Cap or generate 15.36% return on investment over 90 days.

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

Ballast SmallMid Cap  vs.  ETF Series Solutions

Ballast SmallMid Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ballast SmallMid Cap are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, Ballast SmallMid unveiled solid returns over the last few months and may actually be approaching a breakup point.

ETF Series Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETF Series Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ETF Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ballast SmallMid and ETF Series

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

The idea behind Ballast SmallMid Cap and ETF Series Solutions 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.