Correlation Between IShares Fundamental and Minco Capital

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

Diversification Opportunities for IShares Fundamental and Minco Capital

-0.26

Correlation Coefficient

IShares Fundamental  Minco Capital

Very good diversification

The 3 months correlation between IShares and Minco is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Minco Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minco Capital Corp 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 Minco Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minco Capital Corp has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and Minco Capital go up and down completely randomly.

Pair Corralation between IShares Fundamental and Minco Capital

Assuming the 90 days trading horizon IShares Fundamental is expected to generate 4.11 times less return on investment than Minco Capital. But when comparing it to its historical volatility, iShares Fundamental Hedged is 9.14 times less risky than Minco Capital. It trades about 0.08 of its potential returns per unit of risk. Minco Capital Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Minco Capital Corp on September 4, 2024 and sell it today you would earn a total of  0.50  from holding Minco Capital Corp or generate 10.0% return on investment over 90 days.

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

iShares Fundamental Hedged  vs.  Minco Capital Corp

iShares Fundamental

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Fundamental Hedged are ranked lower than 13 (%) 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.

Minco Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Fundamental and Minco Capital

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

The idea behind iShares Fundamental Hedged and Minco Capital Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.