Correlation Between IShares Fundamental and Mawer Global

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

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

Diversification Opportunities for IShares Fundamental and Mawer Global

-0.25

Correlation Coefficient

IShares Fundamental  Mawer Global

Very good diversification

The 3 months correlation between IShares and Mawer is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Mawer Global Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mawer Global Small and IShares Fundamental 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 Fundamental Hedged are associated (or correlated) with Mawer Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mawer Global Small has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and Mawer Global go up and down completely randomly.

Pair Corralation between IShares Fundamental and Mawer Global

Assuming the 90 days trading horizon iShares Fundamental Hedged is expected to under-perform the Mawer Global. In addition to that, IShares Fundamental is 1.06 times more volatile than Mawer Global Small. It trades about -0.36 of its total potential returns per unit of risk. Mawer Global Small is currently generating about -0.06 per unit of volatility. If you would invest  1,555  in Mawer Global Small on September 29, 2024 and sell it today you would lose (12.00) from holding Mawer Global Small or give up 0.77% of portfolio value over 90 days.

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

iShares Fundamental Hedged  vs.  Mawer Global Small

iShares Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mawer Global Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mawer Global Small has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Mawer Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Fundamental and Mawer Global

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

The idea behind iShares Fundamental Hedged and Mawer Global Small 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.