Correlation Between IShares SMIM and Partners Group

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

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

Diversification Opportunities for IShares SMIM and Partners Group

0.81

Correlation Coefficient

IShares SMIM  Partners Group

Very poor diversification

The 3 months correlation between IShares and Partners is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares SMIM ETF and Partners Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partners Group Holding and IShares SMIM 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 SMIM ETF are associated (or correlated) with Partners Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partners Group Holding has no effect on the direction of IShares SMIM i.e., IShares SMIM and Partners Group go up and down completely randomly.

Pair Corralation between IShares SMIM and Partners Group

Assuming the 90 days trading horizon IShares SMIM is expected to generate 1.86 times less return on investment than Partners Group. But when comparing it to its historical volatility, iShares SMIM ETF is 2.62 times less risky than Partners Group. It trades about 0.13 of its potential returns per unit of risk. Partners Group Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  123,300  in Partners Group Holding on December 25, 2024 and sell it today you would earn a total of  11,250  from holding Partners Group Holding or generate 9.12% return on investment over 90 days.

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

iShares SMIM ETF  vs.  Partners Group Holding

iShares SMIM ETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SMIM ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares SMIM is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Partners Group Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Partners Group Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Partners Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IShares SMIM and Partners Group

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

The idea behind iShares SMIM ETF and Partners Group Holding 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.