Correlation Between IShares ESG and Cyber Hornet

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

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

Diversification Opportunities for IShares ESG and Cyber Hornet

0.88

Correlation Coefficient

IShares ESG  Cyber Hornet

Very poor diversification

The 3 months correlation between IShares and Cyber is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Cyber Hornet SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyber Hornet SP and IShares ESG 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 ESG Aware are associated (or correlated) with Cyber Hornet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyber Hornet SP has no effect on the direction of IShares ESG i.e., IShares ESG and Cyber Hornet go up and down completely randomly.

Pair Corralation between IShares ESG and Cyber Hornet

Given the investment horizon of 90 days iShares ESG Aware is expected to generate 0.76 times more return on investment than Cyber Hornet. However, iShares ESG Aware is 1.32 times less risky than Cyber Hornet. It trades about -0.06 of its potential returns per unit of risk. Cyber Hornet SP is currently generating about -0.05 per unit of risk. If you would invest  12,902  in iShares ESG Aware on December 28, 2024 and sell it today you would lose (528.00) from holding iShares ESG Aware or give up 4.09% of portfolio value over 90 days.

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

iShares ESG Aware  vs.  Cyber Hornet SP

iShares ESG Aware

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares ESG Aware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, IShares ESG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Cyber Hornet SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cyber Hornet SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cyber Hornet is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares ESG and Cyber Hornet

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

The idea behind iShares ESG Aware and Cyber Hornet SP 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.