Correlation Between PowerShares Dynamic and PowerShares Global

Can any of the company-specific risk be diversified away by investing in both PowerShares Dynamic 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 Dynamic 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 Dynamic Hardware and PowerShares Global Funds, you can compare the effects of market volatilities on PowerShares Dynamic 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 Dynamic with a short position of PowerShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of PowerShares Dynamic and PowerShares Global.

Diversification Opportunities for PowerShares Dynamic and PowerShares Global

0.0

Correlation Coefficient

PowerShares Dynamic  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 Dynamic Hardware 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 Dynamic 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 Dynamic Hardware 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 Dynamic i.e., PowerShares Dynamic and PowerShares Global go up and down completely randomly.

Pair Corralation between PowerShares Dynamic and PowerShares Global

If you would invest  31,685  in PowerShares Global Funds on September 16, 2024 and sell it today you would earn a total of  5,351  from holding PowerShares Global Funds or generate 16.89% return on investment over 90 days.

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

PowerShares Dynamic Hardware  vs.  PowerShares Global Funds

PowerShares Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PowerShares Dynamic Hardware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical indicators, PowerShares Dynamic is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

PowerShares Global Funds

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PowerShares Global Funds are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, PowerShares Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PowerShares Dynamic and PowerShares Global

The main advantage of trading using opposite PowerShares Dynamic and PowerShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PowerShares Dynamic 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 Dynamic Hardware 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .