Correlation Between Esfera Robotics and IShares Equity

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

By analyzing existing cross correlation between Esfera Robotics R and iShares Equity Enhanced, you can compare the effects of market volatilities on Esfera Robotics and IShares Equity 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 Esfera Robotics with a short position of IShares Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esfera Robotics and IShares Equity.

Diversification Opportunities for Esfera Robotics and IShares Equity

0.81

Correlation Coefficient

Esfera Robotics  IShares Equity

Very poor diversification

The 3 months correlation between Esfera and IShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Esfera Robotics R and iShares Equity Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Equity Enhanced and Esfera Robotics 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 Esfera Robotics R are associated (or correlated) with IShares Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Equity Enhanced has no effect on the direction of Esfera Robotics i.e., Esfera Robotics and IShares Equity go up and down completely randomly.

Pair Corralation between Esfera Robotics and IShares Equity

Assuming the 90 days trading horizon Esfera Robotics R is expected to generate 1.17 times more return on investment than IShares Equity. However, Esfera Robotics is 1.17 times more volatile than iShares Equity Enhanced. It trades about -0.08 of its potential returns per unit of risk. iShares Equity Enhanced is currently generating about -0.1 per unit of risk. If you would invest  35,573  in Esfera Robotics R on December 26, 2024 and sell it today you would lose (2,193) from holding Esfera Robotics R or give up 6.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.16%
Values	Daily Returns

Esfera Robotics R  vs.  iShares Equity Enhanced

Esfera Robotics R

Risk-Adjusted Performance

Very Weak

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

iShares Equity Enhanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Equity Enhanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Esfera Robotics and IShares Equity

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

The idea behind Esfera Robotics R and iShares Equity Enhanced 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.