Correlation Between IShares Continen and Nomura Funds

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

By analyzing existing cross correlation between iShares Continen Eurp and Nomura Funds Ireland, you can compare the effects of market volatilities on IShares Continen and Nomura Funds 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 IShares Continen with a short position of Nomura Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Continen and Nomura Funds.

Diversification Opportunities for IShares Continen and Nomura Funds

0.14

Correlation Coefficient

IShares Continen  Nomura Funds

Average diversification

The 3 months correlation between IShares and Nomura is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding iShares Continen Eurp and Nomura Funds Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Funds Ireland and IShares Continen 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 iShares Continen Eurp are associated (or correlated) with Nomura Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Funds Ireland has no effect on the direction of IShares Continen i.e., IShares Continen and Nomura Funds go up and down completely randomly.

Pair Corralation between IShares Continen and Nomura Funds

Assuming the 90 days trading horizon iShares Continen Eurp is expected to under-perform the Nomura Funds. But the fund apears to be less risky and, when comparing its historical volatility, iShares Continen Eurp is 1.13 times less risky than Nomura Funds. The fund trades about -0.03 of its potential returns per unit of risk. The Nomura Funds Ireland is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,262,213  in Nomura Funds Ireland on October 1, 2024 and sell it today you would earn a total of  37,416  from holding Nomura Funds Ireland or generate 2.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

iShares Continen Eurp  vs.  Nomura Funds Ireland

iShares Continen Eurp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nomura Funds Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Continen and Nomura Funds

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

The idea behind iShares Continen Eurp and Nomura Funds Ireland 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.