Correlation Between Armada Hflr and IShares MSCI

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

By analyzing existing cross correlation between Armada Hflr Pr and iShares MSCI Saudi, you can compare the effects of market volatilities on Armada Hflr and IShares MSCI 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 Armada Hflr with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and IShares MSCI.

Diversification Opportunities for Armada Hflr and IShares MSCI

0.4

Correlation Coefficient

Armada Hflr  IShares MSCI

Very weak diversification

The 3 months correlation between Armada and IShares is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and iShares MSCI Saudi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Saudi and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Saudi has no effect on the direction of Armada Hflr i.e., Armada Hflr and IShares MSCI go up and down completely randomly.

Pair Corralation between Armada Hflr and IShares MSCI

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the IShares MSCI. In addition to that, Armada Hflr is 3.17 times more volatile than iShares MSCI Saudi. It trades about -0.21 of its total potential returns per unit of risk. iShares MSCI Saudi is currently generating about 0.07 per unit of volatility. If you would invest  4,040  in iShares MSCI Saudi on December 27, 2024 and sell it today you would earn a total of  101.00  from holding iShares MSCI Saudi or generate 2.5% return on investment over 90 days.

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

Armada Hflr Pr  vs.  iShares MSCI Saudi

Armada Hflr Pr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

iShares MSCI Saudi

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Saudi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and IShares MSCI

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

The idea behind Armada Hflr Pr and iShares MSCI Saudi 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.