Correlation Between Financial and IShares Global

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

By analyzing existing cross correlation between Financial 15 Split and iShares Global Healthcare, you can compare the effects of market volatilities on Financial and IShares Global 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 Financial with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and IShares Global.

Diversification Opportunities for Financial and IShares Global

-0.93

Correlation Coefficient

Financial  IShares Global

Pay attention - limited upside

The 3 months correlation between Financial and IShares is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and iShares Global Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Healthcare and Financial 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 Financial 15 Split are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Healthcare has no effect on the direction of Financial i.e., Financial and IShares Global go up and down completely randomly.

Pair Corralation between Financial and IShares Global

Assuming the 90 days trading horizon Financial 15 Split is expected to generate 0.44 times more return on investment than IShares Global. However, Financial 15 Split is 2.29 times less risky than IShares Global. It trades about 0.23 of its potential returns per unit of risk. iShares Global Healthcare is currently generating about -0.24 per unit of risk. If you would invest  1,016  in Financial 15 Split on September 13, 2024 and sell it today you would earn a total of  38.00  from holding Financial 15 Split or generate 3.74% return on investment over 90 days.

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

Financial 15 Split  vs.  iShares Global Healthcare

Financial 15 Split

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Global Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Financial and IShares Global

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

The idea behind Financial 15 Split and iShares Global Healthcare 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.