Correlation Between IShares Currency and Martin Currie

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

By analyzing existing cross correlation between iShares Currency Hedged and Martin Currie Sustainable, you can compare the effects of market volatilities on IShares Currency and Martin Currie 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 Currency with a short position of Martin Currie. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Currency and Martin Currie.

Diversification Opportunities for IShares Currency and Martin Currie

0.89

Correlation Coefficient

IShares Currency  Martin Currie

Very poor diversification

The 3 months correlation between IShares and Martin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares Currency Hedged and Martin Currie Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Currie Sustainable and IShares Currency 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 Currency Hedged are associated (or correlated) with Martin Currie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Currie Sustainable has no effect on the direction of IShares Currency i.e., IShares Currency and Martin Currie go up and down completely randomly.

Pair Corralation between IShares Currency and Martin Currie

Given the investment horizon of 90 days iShares Currency Hedged is expected to generate 0.55 times more return on investment than Martin Currie. However, iShares Currency Hedged is 1.82 times less risky than Martin Currie. It trades about 0.17 of its potential returns per unit of risk. Martin Currie Sustainable is currently generating about 0.04 per unit of risk. If you would invest  3,521  in iShares Currency Hedged on December 4, 2024 and sell it today you would earn a total of  203.00  from holding iShares Currency Hedged or generate 5.77% return on investment over 90 days.

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

iShares Currency Hedged  vs.  Martin Currie Sustainable

iShares Currency Hedged

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Currency Hedged are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, IShares Currency is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Martin Currie Sustainable

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Currie Sustainable are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Martin Currie is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Currency and Martin Currie

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

The idea behind iShares Currency Hedged and Martin Currie Sustainable 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.