Correlation Between IShares Core and Humankind Benefit

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

By analyzing existing cross correlation between iShares Core Dividend and Humankind Benefit, you can compare the effects of market volatilities on IShares Core and Humankind Benefit 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 Humankind Benefit. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Humankind Benefit.

Diversification Opportunities for IShares Core and Humankind Benefit

0.77

Correlation Coefficient

IShares Core  Humankind Benefit

Poor diversification

The 3 months correlation between IShares and Humankind is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Dividend and Humankind Benefit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humankind Benefit 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 Dividend are associated (or correlated) with Humankind Benefit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humankind Benefit has no effect on the direction of IShares Core i.e., IShares Core and Humankind Benefit go up and down completely randomly.

Pair Corralation between IShares Core and Humankind Benefit

Given the investment horizon of 90 days iShares Core Dividend is expected to generate 1.03 times more return on investment than Humankind Benefit. However, IShares Core is 1.03 times more volatile than Humankind Benefit. It trades about 0.01 of its potential returns per unit of risk. Humankind Benefit is currently generating about -0.02 per unit of risk. If you would invest  6,132  in iShares Core Dividend on December 22, 2024 and sell it today you would earn a total of  20.00  from holding iShares Core Dividend or generate 0.33% return on investment over 90 days.

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

iShares Core Dividend  vs.  Humankind Benefit

iShares Core Dividend

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Humankind Benefit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humankind Benefit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Humankind Benefit is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Core and Humankind Benefit

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

The idea behind iShares Core Dividend and Humankind Benefit 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.