Correlation Between IShares Continen and Global Opportunities

Can any of the company-specific risk be diversified away by investing in both IShares Continen and Global Opportunities 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 Global Opportunities 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 Global Opportunities Trust, you can compare the effects of market volatilities on IShares Continen and Global Opportunities 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 Global Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Continen and Global Opportunities.

Diversification Opportunities for IShares Continen and Global Opportunities

0.48

Correlation Coefficient

IShares Continen  Global Opportunities

Very weak diversification

The 3 months correlation between IShares and Global is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding iShares Continen Eurp and Global Opportunities Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Opportunities 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 Global Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Opportunities has no effect on the direction of IShares Continen i.e., IShares Continen and Global Opportunities go up and down completely randomly.

Pair Corralation between IShares Continen and Global Opportunities

Assuming the 90 days trading horizon iShares Continen Eurp is expected to generate 0.5 times more return on investment than Global Opportunities. However, iShares Continen Eurp is 2.0 times less risky than Global Opportunities. It trades about 0.0 of its potential returns per unit of risk. Global Opportunities Trust is currently generating about -0.03 per unit of risk. If you would invest  110.00  in iShares Continen Eurp on October 1, 2024 and sell it today you would earn a total of  0.00  from holding iShares Continen Eurp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

iShares Continen Eurp  vs.  Global Opportunities Trust

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.

Global Opportunities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Opportunities Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, Global Opportunities is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Continen and Global Opportunities

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

The idea behind iShares Continen Eurp and Global Opportunities Trust 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.