Correlation Between IShares Fundamental and Partners Value

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

Diversification Opportunities for IShares Fundamental and Partners Value

-0.14

Correlation Coefficient

IShares Fundamental  Partners Value

Good diversification

The 3 months correlation between IShares and Partners is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Partners Value Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partners Value Inves 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 Partners Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partners Value Inves has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and Partners Value go up and down completely randomly.

Pair Corralation between IShares Fundamental and Partners Value

Assuming the 90 days trading horizon iShares Fundamental Hedged is expected to generate 0.32 times more return on investment than Partners Value. However, iShares Fundamental Hedged is 3.11 times less risky than Partners Value. It trades about -0.01 of its potential returns per unit of risk. Partners Value Investments is currently generating about -0.03 per unit of risk. If you would invest  5,380  in iShares Fundamental Hedged on December 29, 2024 and sell it today you would lose (39.00) from holding iShares Fundamental Hedged or give up 0.72% 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.  Partners Value Investments

iShares Fundamental

Risk-Adjusted Performance

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.

Partners Value Inves

Risk-Adjusted Performance

Very Weak

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

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

The idea behind iShares Fundamental Hedged and Partners Value Investments 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.