Correlation Between Global Dividend and FT Vest

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

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

Diversification Opportunities for Global Dividend and FT Vest

0.26

Correlation Coefficient

Global Dividend  FT Vest

Modest diversification

The 3 months correlation between Global and DHDG is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Global Dividend and and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity and Global Dividend 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 Global Dividend and are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of Global Dividend i.e., Global Dividend and FT Vest go up and down completely randomly.

Pair Corralation between Global Dividend and FT Vest

Assuming the 90 days horizon Global Dividend and is expected to under-perform the FT Vest. In addition to that, Global Dividend is 1.33 times more volatile than FT Vest Equity. It trades about -0.16 of its total potential returns per unit of risk. FT Vest Equity is currently generating about 0.17 per unit of volatility. If you would invest  3,038  in FT Vest Equity on September 15, 2024 and sell it today you would earn a total of  76.00  from holding FT Vest Equity or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	60.94%
Values	Daily Returns

Global Dividend and  vs.  FT Vest Equity

Global Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

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

FT Vest Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Equity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, FT Vest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global Dividend and FT Vest

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

The idea behind Global Dividend and and FT Vest Equity 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.