Correlation Between IShares VII and Alumexx NV

Can any of the company-specific risk be diversified away by investing in both IShares VII and Alumexx NV 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 VII and Alumexx NV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares VII Public and Alumexx NV, you can compare the effects of market volatilities on IShares VII and Alumexx NV 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 VII with a short position of Alumexx NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and Alumexx NV.

Diversification Opportunities for IShares VII and Alumexx NV

0.18

Correlation Coefficient

IShares VII  Alumexx NV

Average diversification

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

Pair Corralation between IShares VII and Alumexx NV

Assuming the 90 days trading horizon iShares VII Public is expected to generate 0.4 times more return on investment than Alumexx NV. However, iShares VII Public is 2.52 times less risky than Alumexx NV. It trades about 0.15 of its potential returns per unit of risk. Alumexx NV is currently generating about 0.05 per unit of risk. If you would invest  12,680  in iShares VII Public on September 17, 2024 and sell it today you would earn a total of  454.00  from holding iShares VII Public or generate 3.58% return on investment over 90 days.

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

iShares VII Public  vs.  Alumexx NV

iShares VII Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares VII Public has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares VII is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Alumexx NV

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alumexx NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alumexx NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares VII and Alumexx NV

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

The idea behind iShares VII Public and Alumexx NV 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.