Correlation Between Associated British and IShares Physical

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

By analyzing existing cross correlation between Associated British Foods and iShares Physical Silver, you can compare the effects of market volatilities on Associated British and IShares Physical 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 Associated British with a short position of IShares Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and IShares Physical.

Diversification Opportunities for Associated British and IShares Physical

-0.74

Correlation Coefficient

Associated British  IShares Physical

Pay attention - limited upside

The 3 months correlation between Associated and IShares is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and iShares Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Physical Silver and Associated British 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 Associated British Foods are associated (or correlated) with IShares Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Physical Silver has no effect on the direction of Associated British i.e., Associated British and IShares Physical go up and down completely randomly.

Pair Corralation between Associated British and IShares Physical

Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the IShares Physical. In addition to that, Associated British is 1.11 times more volatile than iShares Physical Silver. It trades about -0.07 of its total potential returns per unit of risk. iShares Physical Silver is currently generating about 0.17 per unit of volatility. If you would invest  2,815  in iShares Physical Silver on December 26, 2024 and sell it today you would earn a total of  398.00  from holding iShares Physical Silver or generate 14.14% return on investment over 90 days.

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

Associated British Foods  vs.  iShares Physical Silver

Associated British Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Associated British Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock'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 firm shareholders.

iShares Physical Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Physical Silver are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Physical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Associated British and IShares Physical

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

The idea behind Associated British Foods and iShares Physical Silver 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.