Correlation Between IShares Continental and Sanlam Global

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

By analyzing existing cross correlation between iShares Continental European and Sanlam Global Artificial, you can compare the effects of market volatilities on IShares Continental and Sanlam Global 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 Continental with a short position of Sanlam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Continental and Sanlam Global.

Diversification Opportunities for IShares Continental and Sanlam Global

-0.67

Correlation Coefficient

IShares Continental  Sanlam Global

Excellent diversification

The 3 months correlation between IShares and Sanlam is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares Continental European and Sanlam Global Artificial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanlam Global Artificial and IShares Continental 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 Continental European are associated (or correlated) with Sanlam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanlam Global Artificial has no effect on the direction of IShares Continental i.e., IShares Continental and Sanlam Global go up and down completely randomly.

Pair Corralation between IShares Continental and Sanlam Global

Assuming the 90 days trading horizon iShares Continental European is expected to generate 0.6 times more return on investment than Sanlam Global. However, iShares Continental European is 1.68 times less risky than Sanlam Global. It trades about -0.06 of its potential returns per unit of risk. Sanlam Global Artificial is currently generating about -0.1 per unit of risk. If you would invest  111.00  in iShares Continental European on October 4, 2024 and sell it today you would lose (1.00) from holding iShares Continental European or give up 0.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

iShares Continental European  vs.  Sanlam Global Artificial

iShares Continental

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sanlam Global Artificial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sanlam Global Artificial are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively weak technical and fundamental indicators, Sanlam Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IShares Continental and Sanlam Global

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

The idea behind iShares Continental European and Sanlam Global Artificial 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.