Correlation Between IShares Cohen and Fundamental Income

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

By analyzing existing cross correlation between iShares Cohen Steers and Fundamental Income Net, you can compare the effects of market volatilities on IShares Cohen and Fundamental Income 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 Cohen with a short position of Fundamental Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Cohen and Fundamental Income.

Diversification Opportunities for IShares Cohen and Fundamental Income

0.77

Correlation Coefficient

IShares Cohen  Fundamental Income

Poor diversification

The 3 months correlation between IShares and Fundamental is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding iShares Cohen Steers and Fundamental Income Net in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Income Net and IShares Cohen 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 Cohen Steers are associated (or correlated) with Fundamental Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Income Net has no effect on the direction of IShares Cohen i.e., IShares Cohen and Fundamental Income go up and down completely randomly.

Pair Corralation between IShares Cohen and Fundamental Income

Considering the 90-day investment horizon IShares Cohen is expected to generate 2.82 times less return on investment than Fundamental Income. But when comparing it to its historical volatility, iShares Cohen Steers is 1.01 times less risky than Fundamental Income. It trades about 0.04 of its potential returns per unit of risk. Fundamental Income Net is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,299  in Fundamental Income Net on December 29, 2024 and sell it today you would earn a total of  177.00  from holding Fundamental Income Net or generate 7.7% return on investment over 90 days.

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

iShares Cohen Steers  vs.  Fundamental Income Net

iShares Cohen Steers

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Cohen Steers are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, IShares Cohen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Fundamental Income Net

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fundamental Income Net are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Fundamental Income may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IShares Cohen and Fundamental Income

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

The idea behind iShares Cohen Steers and Fundamental Income Net 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .