Correlation Between Ocean Park and IShares ESG

Can any of the company-specific risk be diversified away by investing in both Ocean Park and IShares ESG 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 ESG 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 ESG Screened, you can compare the effects of market volatilities on Ocean Park and IShares ESG 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 ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocean Park and IShares ESG.

Diversification Opportunities for Ocean Park and IShares ESG

0.72

Correlation Coefficient

Ocean Park  IShares ESG

Poor diversification

The 3 months correlation between Ocean and IShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Park High and iShares ESG Screened in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Screened 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 ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Screened has no effect on the direction of Ocean Park i.e., Ocean Park and IShares ESG go up and down completely randomly.

Pair Corralation between Ocean Park and IShares ESG

Given the investment horizon of 90 days Ocean Park High is expected to generate 0.23 times more return on investment than IShares ESG. However, Ocean Park High is 4.41 times less risky than IShares ESG. It trades about -0.19 of its potential returns per unit of risk. iShares ESG Screened is currently generating about -0.26 per unit of risk. If you would invest  2,543  in Ocean Park High on October 10, 2024 and sell it today you would lose (24.00) from holding Ocean Park High or give up 0.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Ocean Park High  vs.  iShares ESG Screened

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 ESG Screened

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Screened are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking indicators, IShares ESG is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ocean Park and IShares ESG

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

The idea behind Ocean Park High and iShares ESG Screened 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.