Correlation Between IShares Fundamental and Highwood Asset

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

Diversification Opportunities for IShares Fundamental and Highwood Asset

0.18

Correlation Coefficient

IShares Fundamental  Highwood Asset

Average diversification

The 3 months correlation between IShares and Highwood is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Highwood Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwood Asset Management 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 Highwood Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwood Asset Management has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and Highwood Asset go up and down completely randomly.

Pair Corralation between IShares Fundamental and Highwood Asset

Assuming the 90 days trading horizon IShares Fundamental is expected to generate 251.5 times less return on investment than Highwood Asset. But when comparing it to its historical volatility, iShares Fundamental Hedged is 3.27 times less risky than Highwood Asset. It trades about 0.0 of its potential returns per unit of risk. Highwood Asset Management is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  598.00  in Highwood Asset Management on October 5, 2024 and sell it today you would earn a total of  8.00  from holding Highwood Asset Management or generate 1.34% return on investment over 90 days.

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

iShares Fundamental Hedged  vs.  Highwood Asset Management

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.

Highwood Asset Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highwood Asset Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Highwood Asset is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Fundamental and Highwood Asset

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

The idea behind iShares Fundamental Hedged and Highwood Asset Management 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 Transaction History module to view history of all your transactions and understand their impact on performance.