Correlation Between PowerShares High and PowerShares Global

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

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

Diversification Opportunities for PowerShares High and PowerShares Global

0.0

Correlation Coefficient

PowerShares High  PowerShares Global

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

Pair Corralation between PowerShares High and PowerShares Global

If you would invest  47,419  in PowerShares Global Funds on September 16, 2024 and sell it today you would earn a total of  0.00  from holding PowerShares Global Funds or generate 0.0% return on investment over 90 days.

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

PowerShares High Growth  vs.  PowerShares Global Funds

PowerShares High Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PowerShares High Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical indicators, PowerShares High is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

PowerShares Global Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PowerShares Global Funds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PowerShares Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PowerShares High and PowerShares Global

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

The idea behind PowerShares High Growth and PowerShares Global Funds 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.