Correlation Between ETRADE Financial and DGAZ

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Can any of the company-specific risk be diversified away by investing in both ETRADE Financial and DGAZ 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 ETRADE Financial and DGAZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRADE Financial LLC and DGAZ, you can compare the effects of market volatilities on ETRADE Financial and DGAZ 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 ETRADE Financial with a short position of DGAZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRADE Financial and DGAZ.

Diversification Opportunities for ETRADE Financial and DGAZ

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ETRADE and DGAZ is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ETRADE Financial LLC and DGAZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGAZ and ETRADE Financial 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 ETRADE Financial LLC are associated (or correlated) with DGAZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGAZ has no effect on the direction of ETRADE Financial i.e., ETRADE Financial and DGAZ go up and down completely randomly.

Pair Corralation between ETRADE Financial and DGAZ

If you would invest (100.00) in DGAZ on December 29, 2023 and sell it today you would earn a total of  100.00  from holding DGAZ or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ETRADE Financial LLC  vs.  DGAZ

 Performance 
       Timeline  
ETRADE Financial LLC 

Risk-Adjusted Performance

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Over the last 90 days ETRADE Financial LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ETRADE Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
DGAZ 

Risk-Adjusted Performance

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

ETRADE Financial and DGAZ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ETRADE Financial and DGAZ

The main advantage of trading using opposite ETRADE Financial and DGAZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRADE Financial position performs unexpectedly, DGAZ 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 DGAZ will offset losses from the drop in DGAZ's long position.
The idea behind ETRADE Financial LLC and DGAZ 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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