Correlation Between IShares Fundamental and Faction Investment

Can any of the company-specific risk be diversified away by investing in both IShares Fundamental and Faction Investment 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 Faction Investment 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 Faction Investment Group, you can compare the effects of market volatilities on IShares Fundamental and Faction Investment 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 Faction Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Fundamental and Faction Investment.

Diversification Opportunities for IShares Fundamental and Faction Investment

0.0

Correlation Coefficient

IShares Fundamental  Faction Investment

Pay attention - limited upside

The 3 months correlation between IShares and Faction is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Faction Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faction Investment 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 Faction Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faction Investment has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and Faction Investment go up and down completely randomly.

Pair Corralation between IShares Fundamental and Faction Investment

If you would invest  5,281  in iShares Fundamental Hedged on September 12, 2024 and sell it today you would earn a total of  346.00  from holding iShares Fundamental Hedged or generate 6.55% return on investment over 90 days.

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

iShares Fundamental Hedged  vs.  Faction Investment Group

iShares Fundamental

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Fundamental Hedged are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares Fundamental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Faction Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Faction Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Faction Investment 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 Faction Investment

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

The idea behind iShares Fundamental Hedged and Faction Investment Group 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.