Correlation Between Technology Select and EKAR
Can any of the company-specific risk be diversified away by investing in both Technology Select and EKAR 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 Technology Select and EKAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Select Sector and EKAR, you can compare the effects of market volatilities on Technology Select and EKAR 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 Technology Select with a short position of EKAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and EKAR.
Diversification Opportunities for Technology Select and EKAR
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Technology and EKAR is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and EKAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EKAR and Technology Select 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 Technology Select Sector are associated (or correlated) with EKAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EKAR has no effect on the direction of Technology Select i.e., Technology Select and EKAR go up and down completely randomly.
Pair Corralation between Technology Select and EKAR
Considering the 90-day investment horizon Technology Select is expected to generate 57.34 times less return on investment than EKAR. But when comparing it to its historical volatility, Technology Select Sector is 48.37 times less risky than EKAR. It trades about 0.06 of its potential returns per unit of risk. EKAR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,144 in EKAR on January 26, 2024 and sell it today you would lose (243.50) from holding EKAR or give up 7.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 37.3% |
| Values | Daily Returns |
Technology Select Sector vs. EKAR
Performance |
| Timeline |
| Technology Select Sector |
| EKAR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Technology Select and EKAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and EKAR
The main advantage of trading using opposite Technology Select and EKAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select position performs unexpectedly, EKAR 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 EKAR will offset losses from the drop in EKAR's long position.| Technology Select vs. OShares Quality Dividend | Technology Select vs. Aquagold International | Technology Select vs. Morningstar Unconstrained Allocation | Technology Select vs. High Yield Municipal Fund |
| EKAR vs. OShares Quality Dividend | EKAR vs. Aquagold International | EKAR vs. Morningstar Unconstrained Allocation | EKAR vs. High Yield Municipal Fund |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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