Correlation Between IShares Fundamental and Cymbria
Can any of the company-specific risk be diversified away by investing in both IShares Fundamental and Cymbria 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 Cymbria 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 Cymbria, you can compare the effects of market volatilities on IShares Fundamental and Cymbria 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 Cymbria. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Fundamental and Cymbria.
Diversification Opportunities for IShares Fundamental and Cymbria
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Cymbria is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Cymbria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cymbria 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 Cymbria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cymbria has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and Cymbria go up and down completely randomly.
Pair Corralation between IShares Fundamental and Cymbria
Assuming the 90 days trading horizon iShares Fundamental Hedged is expected to generate 0.86 times more return on investment than Cymbria. However, iShares Fundamental Hedged is 1.16 times less risky than Cymbria. It trades about 0.07 of its potential returns per unit of risk. Cymbria is currently generating about 0.06 per unit of risk. If you would invest 4,294 in iShares Fundamental Hedged on October 14, 2024 and sell it today you would earn a total of 1,112 from holding iShares Fundamental Hedged or generate 25.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
iShares Fundamental Hedged vs. Cymbria
Performance |
Timeline |
iShares Fundamental |
Cymbria |
IShares Fundamental and Cymbria Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Fundamental and Cymbria
The main advantage of trading using opposite IShares Fundamental and Cymbria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Fundamental position performs unexpectedly, Cymbria 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 Cymbria will offset losses from the drop in Cymbria's long position.IShares Fundamental vs. iShares Convertible Bond | IShares Fundamental vs. iShares SP Mid Cap | IShares Fundamental vs. iShares Edge MSCI | IShares Fundamental vs. iShares Flexible Monthly |
Cymbria vs. Clairvest Group | Cymbria vs. Uniteds Limited | Cymbria vs. E L Financial Corp | Cymbria vs. Senvest Capital |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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