Correlation Between Ocean Park and IShares 10

Can any of the company-specific risk be diversified away by investing in both Ocean Park and IShares 10 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 Ocean Park and IShares 10 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ocean Park High and iShares 10 Year, you can compare the effects of market volatilities on Ocean Park and IShares 10 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 Ocean Park with a short position of IShares 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocean Park and IShares 10.

Diversification Opportunities for Ocean Park and IShares 10

0.65

Correlation Coefficient

Ocean Park  IShares 10

Poor diversification

The 3 months correlation between Ocean and IShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Park High and iShares 10 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 10 Year and Ocean Park 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 Ocean Park High are associated (or correlated) with IShares 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 10 Year has no effect on the direction of Ocean Park i.e., Ocean Park and IShares 10 go up and down completely randomly.

Pair Corralation between Ocean Park and IShares 10

Given the investment horizon of 90 days Ocean Park High is expected to generate 0.32 times more return on investment than IShares 10. However, Ocean Park High is 3.13 times less risky than IShares 10. It trades about -0.09 of its potential returns per unit of risk. iShares 10 Year is currently generating about -0.1 per unit of risk. If you would invest  2,528  in Ocean Park High on September 22, 2024 and sell it today you would lose (12.00) from holding Ocean Park High or give up 0.47% of portfolio value over 90 days.

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

Ocean Park High  vs.  iShares 10 Year

Ocean Park High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Park High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Ocean Park is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

iShares 10 Year

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares 10 Year has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Ocean Park and IShares 10

The main advantage of trading using opposite Ocean Park and IShares 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Park position performs unexpectedly, IShares 10 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 IShares 10 will offset losses from the drop in IShares 10's long position.

The idea behind Ocean Park High and iShares 10 Year 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.