Correlation Between SPTSX Dividend and Ether ETF

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

By analyzing existing cross correlation between SPTSX Dividend Aristocrats and Ether ETF CAD, you can compare the effects of market volatilities on SPTSX Dividend and Ether ETF 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 SPTSX Dividend with a short position of Ether ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPTSX Dividend and Ether ETF.

Diversification Opportunities for SPTSX Dividend and Ether ETF

0.58

Correlation Coefficient

SPTSX Dividend  Ether ETF

Very weak diversification

The 3 months correlation between SPTSX and Ether is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SPTSX Dividend Aristocrats and Ether ETF CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ether ETF CAD and SPTSX 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 SPTSX Dividend Aristocrats are associated (or correlated) with Ether ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ether ETF CAD has no effect on the direction of SPTSX Dividend i.e., SPTSX Dividend and Ether ETF go up and down completely randomly.

Pair Corralation between SPTSX Dividend and Ether ETF

Assuming the 90 days trading horizon SPTSX Dividend is expected to generate 1.19 times less return on investment than Ether ETF. But when comparing it to its historical volatility, SPTSX Dividend Aristocrats is 8.0 times less risky than Ether ETF. It trades about 0.2 of its potential returns per unit of risk. Ether ETF CAD is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,598  in Ether ETF CAD on September 23, 2024 and sell it today you would earn a total of  79.00  from holding Ether ETF CAD or generate 4.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

SPTSX Dividend Aristocrats  vs.  Ether ETF CAD

Pair Trading with SPTSX Dividend and Ether ETF

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

The idea behind SPTSX Dividend Aristocrats and Ether ETF CAD 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .