Correlation Between IShares Core and LG Clean

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

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

Diversification Opportunities for IShares Core and LG Clean

-0.7

Correlation Coefficient

IShares Core  LG Clean

Excellent diversification

The 3 months correlation between IShares and RENW is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and LG Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Clean Energy and IShares Core 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 Core SP are associated (or correlated) with LG Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Clean Energy has no effect on the direction of IShares Core i.e., IShares Core and LG Clean go up and down completely randomly.

Pair Corralation between IShares Core and LG Clean

Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.53 times more return on investment than LG Clean. However, iShares Core SP is 1.88 times less risky than LG Clean. It trades about -0.07 of its potential returns per unit of risk. LG Clean Energy is currently generating about -0.15 per unit of risk. If you would invest  63,540  in iShares Core SP on September 28, 2024 and sell it today you would lose (680.00) from holding iShares Core SP or give up 1.07% of portfolio value over 90 days.

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

iShares Core SP  vs.  LG Clean Energy

iShares Core SP

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

LG Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with IShares Core and LG Clean

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

The idea behind iShares Core SP and LG Clean Energy 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 CEOs Directory module to screen CEOs from public companies around the world.