Correlation Between Strive 500 and ZEGA Buy

Can any of the company-specific risk be diversified away by investing in both Strive 500 and ZEGA Buy 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 Strive 500 and ZEGA Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Strive 500 ETF and ZEGA Buy and, you can compare the effects of market volatilities on Strive 500 and ZEGA Buy 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 Strive 500 with a short position of ZEGA Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strive 500 and ZEGA Buy.

Diversification Opportunities for Strive 500 and ZEGA Buy

0.95

Correlation Coefficient

Strive 500  ZEGA Buy

Almost no diversification

The 3 months correlation between Strive and ZEGA is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Strive 500 ETF and ZEGA Buy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEGA Buy and Strive 500 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 Strive 500 ETF are associated (or correlated) with ZEGA Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEGA Buy has no effect on the direction of Strive 500 i.e., Strive 500 and ZEGA Buy go up and down completely randomly.

Pair Corralation between Strive 500 and ZEGA Buy

Given the investment horizon of 90 days Strive 500 ETF is expected to generate 1.28 times more return on investment than ZEGA Buy. However, Strive 500 is 1.28 times more volatile than ZEGA Buy and. It trades about -0.27 of its potential returns per unit of risk. ZEGA Buy and is currently generating about -0.39 per unit of risk. If you would invest  3,342  in Strive 500 ETF on January 24, 2024 and sell it today you would lose (128.00) from holding Strive 500 ETF or give up 3.83% of portfolio value over 90 days.

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

Strive 500 ETF  vs.  ZEGA Buy and

Strive 500 ETF

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Strive 500 ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Strive 500 is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ZEGA Buy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ZEGA Buy and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, ZEGA Buy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Strive 500 and ZEGA Buy

The main advantage of trading using opposite Strive 500 and ZEGA Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strive 500 position performs unexpectedly, ZEGA Buy 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 ZEGA Buy will offset losses from the drop in ZEGA Buy's long position.

The idea behind Strive 500 ETF and ZEGA Buy and 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.