diversifiable risk of combining Enhanced and Absolute Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enhanced Us Large and Absolute Capital Defender, you can compare the effects of market volatilities on Enhanced and Absolute Capital 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 Enhanced with a short position of Absolute Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced and Absolute Capital.
Diversification Opportunities for Enhanced and Absolute Capital
Pair Corralation between Enhanced and Absolute Capital
Assuming the 90 days horizon Enhanced Us Large is expected to generate 1.92 times more return on investment than Absolute Capital. However, Enhanced is 1.92 times more volatile than Absolute Capital Defender. It trades about 0.16 of its potential returns per unit of risk. Absolute Capital Defender is currently generating about 0.15 per unit of risk. If you would invest 1,269 in Enhanced Us Large on November 24, 2023 and sell it today you would earn a total of 32.00 from holding Enhanced Us Large or generate 2.52% return on investment over 90 days.
ENHANCED US LARGE vs. ABSOLUTE CAPITAL DEFENDER
Enhanced and Absolute Capital Volatility Contrast
Pair Trading with Enhanced and Absolute CapitalThe main advantage of trading using opposite Enhanced and Absolute Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhanced position performs unexpectedly, Absolute Capital 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 Absolute Capital will offset losses from the drop in Absolute Capital's long position. The idea behind Enhanced Us Large and Absolute Capital Defender 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 Stocks Directory module to find actively traded stocks across global markets.
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