Correlation Between IShares BRIC and GOOD BUILDINGS

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

By analyzing existing cross correlation between iShares BRIC 50 and GOOD BUILDINGS Swiss, you can compare the effects of market volatilities on IShares BRIC and GOOD BUILDINGS 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 BRIC with a short position of GOOD BUILDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares BRIC and GOOD BUILDINGS.

Diversification Opportunities for IShares BRIC and GOOD BUILDINGS

-0.2

Correlation Coefficient

IShares BRIC  GOOD BUILDINGS

Good diversification

The 3 months correlation between IShares and GOOD is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding iShares BRIC 50 and GOOD BUILDINGS Swiss in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOOD BUILDINGS Swiss and IShares BRIC 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 BRIC 50 are associated (or correlated) with GOOD BUILDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOOD BUILDINGS Swiss has no effect on the direction of IShares BRIC i.e., IShares BRIC and GOOD BUILDINGS go up and down completely randomly.

Pair Corralation between IShares BRIC and GOOD BUILDINGS

If you would invest (100.00) in GOOD BUILDINGS Swiss on October 5, 2024 and sell it today you would earn a total of  100.00  from holding GOOD BUILDINGS Swiss or generate -100.0% return on investment over 90 days.

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

iShares BRIC 50  vs.  GOOD BUILDINGS Swiss

iShares BRIC 50

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares BRIC 50 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares BRIC is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GOOD BUILDINGS Swiss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GOOD BUILDINGS Swiss has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable basic indicators, GOOD BUILDINGS is not utilizing all of its potentials. The new stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares BRIC and GOOD BUILDINGS

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

The idea behind iShares BRIC 50 and GOOD BUILDINGS Swiss 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..