Correlation Between IShares Dow and Sanlam Global

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

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

Diversification Opportunities for IShares Dow and Sanlam Global

-0.15

Correlation Coefficient

IShares Dow  Sanlam Global

Good diversification

The 3 months correlation between IShares and Sanlam is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dow Jones and Sanlam Global Artificial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanlam Global Artificial and IShares Dow 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 Dow Jones are associated (or correlated) with Sanlam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanlam Global Artificial has no effect on the direction of IShares Dow i.e., IShares Dow and Sanlam Global go up and down completely randomly.

Pair Corralation between IShares Dow and Sanlam Global

Assuming the 90 days trading horizon iShares Dow Jones is expected to under-perform the Sanlam Global. But the etf apears to be less risky and, when comparing its historical volatility, iShares Dow Jones is 1.6 times less risky than Sanlam Global. The etf trades about -0.06 of its potential returns per unit of risk. The Sanlam Global Artificial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  33,061  in Sanlam Global Artificial on September 22, 2024 and sell it today you would earn a total of  4,798  from holding Sanlam Global Artificial or generate 14.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

iShares Dow Jones  vs.  Sanlam Global Artificial

iShares Dow Jones

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sanlam Global Artificial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sanlam Global Artificial are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively weak technical and fundamental indicators, Sanlam Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Dow and Sanlam Global

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

The idea behind iShares Dow Jones and Sanlam Global Artificial 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.