Correlation Between STF Tactical and ETF Series

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

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

Diversification Opportunities for STF Tactical and ETF Series

0.95

Correlation Coefficient

STF Tactical  ETF Series

Almost no diversification

The 3 months correlation between STF and ETF is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding STF Tactical Growth 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 STF Tactical 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 STF Tactical Growth 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 STF Tactical i.e., STF Tactical and ETF Series go up and down completely randomly.

Pair Corralation between STF Tactical and ETF Series

Considering the 90-day investment horizon STF Tactical Growth is expected to generate 1.42 times more return on investment than ETF Series. However, STF Tactical is 1.42 times more volatile than ETF Series Solutions. It trades about 0.15 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.18 per unit of risk. If you would invest  3,163  in STF Tactical Growth on August 31, 2024 and sell it today you would earn a total of  297.00  from holding STF Tactical Growth or generate 9.39% return on investment over 90 days.

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

STF Tactical Growth  vs.  ETF Series Solutions

STF Tactical Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STF Tactical Growth are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, STF Tactical may actually be approaching a critical reversion point that can send shares even higher in December 2024.

ETF Series Solutions

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, ETF Series may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with STF Tactical and ETF Series

The main advantage of trading using opposite STF Tactical and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STF Tactical 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 STF Tactical Growth 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.