Correlation Between IShares Global and Inspire Global

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

By analyzing existing cross correlation between iShares Global 100 and Inspire Global Hope, you can compare the effects of market volatilities on IShares Global and Inspire 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 Global with a short position of Inspire Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Inspire Global.

Diversification Opportunities for IShares Global and Inspire Global

0.37

Correlation Coefficient

IShares Global  Inspire Global

Weak diversification

The 3 months correlation between IShares and Inspire is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global 100 and Inspire Global Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Global Hope and IShares Global 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 Global 100 are associated (or correlated) with Inspire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Global Hope has no effect on the direction of IShares Global i.e., IShares Global and Inspire Global go up and down completely randomly.

Pair Corralation between IShares Global and Inspire Global

Considering the 90-day investment horizon iShares Global 100 is expected to generate 1.08 times more return on investment than Inspire Global. However, IShares Global is 1.08 times more volatile than Inspire Global Hope. It trades about 0.14 of its potential returns per unit of risk. Inspire Global Hope is currently generating about 0.01 per unit of risk. If you would invest  9,667  in iShares Global 100 on September 17, 2024 and sell it today you would earn a total of  657.50  from holding iShares Global 100 or generate 6.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

iShares Global 100  vs.  Inspire Global Hope

iShares Global 100

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global 100 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, IShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Inspire Global Hope

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspire Global Hope has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Inspire Global is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Global and Inspire Global

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

The idea behind iShares Global 100 and Inspire Global Hope 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.