Correlation Between INC and IShares Energy

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

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

Diversification Opportunities for INC and IShares Energy

0.0

Correlation Coefficient

INC  IShares Energy

Pay attention - limited upside

The 3 months correlation between INC and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding INC and iShares Energy Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Energy Storage and INC 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 INC are associated (or correlated) with IShares Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Energy Storage has no effect on the direction of INC i.e., INC and IShares Energy go up and down completely randomly.

Pair Corralation between INC and IShares Energy

If you would invest (100.00) in INC on December 27, 2024 and sell it today you would earn a total of  100.00  from holding INC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

INC  vs.  iShares Energy Storage

INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, INC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Energy Storage

Risk-Adjusted Performance

Very Weak

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

Pair Trading with INC and IShares Energy

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

The idea behind INC and iShares Energy Storage 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.