Correlation Between Inpex Corp and IShares Global

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

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

Diversification Opportunities for Inpex Corp and IShares Global

0.56

Correlation Coefficient

Inpex Corp  IShares Global

Very weak diversification

The 3 months correlation between Inpex and IShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Inpex Corp ADR and iShares Global Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Clean and Inpex Corp 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 Inpex Corp ADR are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Clean has no effect on the direction of Inpex Corp i.e., Inpex Corp and IShares Global go up and down completely randomly.

Pair Corralation between Inpex Corp and IShares Global

Assuming the 90 days horizon Inpex Corp ADR is expected to generate 1.36 times more return on investment than IShares Global. However, Inpex Corp is 1.36 times more volatile than iShares Global Clean. It trades about 0.04 of its potential returns per unit of risk. iShares Global Clean is currently generating about -0.06 per unit of risk. If you would invest  1,014  in Inpex Corp ADR on September 5, 2024 and sell it today you would earn a total of  323.00  from holding Inpex Corp ADR or generate 31.85% return on investment over 90 days.

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

Inpex Corp ADR  vs.  iShares Global Clean

Inpex Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inpex Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Inpex Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Global Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Clean has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Inpex Corp and IShares Global

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

The idea behind Inpex Corp ADR and iShares Global Clean 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.