Correlation Between IShares Fundamental and WELL Health

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

Diversification Opportunities for IShares Fundamental and WELL Health

0.88

Correlation Coefficient

IShares Fundamental  WELL Health

Very poor diversification

The 3 months correlation between IShares and WELL is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and WELL Health Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELL Health Technologies 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 WELL Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELL Health Technologies has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and WELL Health go up and down completely randomly.

Pair Corralation between IShares Fundamental and WELL Health

Assuming the 90 days trading horizon IShares Fundamental is expected to generate 4.05 times less return on investment than WELL Health. But when comparing it to its historical volatility, iShares Fundamental Hedged is 3.81 times less risky than WELL Health. It trades about 0.18 of its potential returns per unit of risk. WELL Health Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  436.00  in WELL Health Technologies on September 1, 2024 and sell it today you would earn a total of  150.00  from holding WELL Health Technologies or generate 34.4% return on investment over 90 days.

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

iShares Fundamental Hedged  vs.  WELL Health Technologies

iShares Fundamental

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Fundamental Hedged are ranked lower than 14 (%) 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 December 2024.

WELL Health Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WELL Health Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, WELL Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Fundamental and WELL Health

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

The idea behind iShares Fundamental Hedged and WELL Health Technologies 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.