Correlation Between IE00B0H4TS55 and Cap ISR

Can any of the company-specific risk be diversified away by investing in both IE00B0H4TS55 and Cap ISR 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 IE00B0H4TS55 and Cap ISR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IE00B0H4TS55 and Cap ISR Actions, you can compare the effects of market volatilities on IE00B0H4TS55 and Cap ISR 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 IE00B0H4TS55 with a short position of Cap ISR. Check out your portfolio center. Please also check ongoing floating volatility patterns of IE00B0H4TS55 and Cap ISR.

Diversification Opportunities for IE00B0H4TS55 and Cap ISR

0.79

Correlation Coefficient

IE00B0H4TS55  Cap ISR

Poor diversification

The 3 months correlation between IE00B0H4TS55 and Cap is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding IE00B0H4TS55 and Cap ISR Actions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cap ISR Actions and IE00B0H4TS55 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 IE00B0H4TS55 are associated (or correlated) with Cap ISR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cap ISR Actions has no effect on the direction of IE00B0H4TS55 i.e., IE00B0H4TS55 and Cap ISR go up and down completely randomly.

Pair Corralation between IE00B0H4TS55 and Cap ISR

Assuming the 90 days trading horizon IE00B0H4TS55 is expected to under-perform the Cap ISR. But the fund apears to be less risky and, when comparing its historical volatility, IE00B0H4TS55 is 3.1 times less risky than Cap ISR. The fund trades about -0.13 of its potential returns per unit of risk. The Cap ISR Actions is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  615.00  in Cap ISR Actions on September 22, 2024 and sell it today you would lose (11.00) from holding Cap ISR Actions or give up 1.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

IE00B0H4TS55  vs.  Cap ISR Actions

IE00B0H4TS55

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IE00B0H4TS55 has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, IE00B0H4TS55 is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Cap ISR Actions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cap ISR Actions has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Cap ISR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IE00B0H4TS55 and Cap ISR

The main advantage of trading using opposite IE00B0H4TS55 and Cap ISR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IE00B0H4TS55 position performs unexpectedly, Cap ISR 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 Cap ISR will offset losses from the drop in Cap ISR's long position.

The idea behind IE00B0H4TS55 and Cap ISR Actions 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.