Correlation Between IShares Core and Ocean Park

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

By analyzing existing cross correlation between iShares Core 1 5 and Ocean Park International, you can compare the effects of market volatilities on IShares Core and Ocean Park 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 Core with a short position of Ocean Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Ocean Park.

Diversification Opportunities for IShares Core and Ocean Park

-0.41

Correlation Coefficient

IShares Core  Ocean Park

Very good diversification

The 3 months correlation between IShares and Ocean is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core 1 5 and Ocean Park International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Park International and IShares Core 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 Core 1 5 are associated (or correlated) with Ocean Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Park International has no effect on the direction of IShares Core i.e., IShares Core and Ocean Park go up and down completely randomly.

Pair Corralation between IShares Core and Ocean Park

Given the investment horizon of 90 days iShares Core 1 5 is expected to generate 0.22 times more return on investment than Ocean Park. However, iShares Core 1 5 is 4.58 times less risky than Ocean Park. It trades about 0.19 of its potential returns per unit of risk. Ocean Park International is currently generating about -0.17 per unit of risk. If you would invest  4,764  in iShares Core 1 5 on December 2, 2024 and sell it today you would earn a total of  69.00  from holding iShares Core 1 5 or generate 1.45% return on investment over 90 days.

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

iShares Core 1 5  vs.  Ocean Park International

iShares Core 1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core 1 5 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ocean Park International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ocean Park International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Ocean Park is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and Ocean Park

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

The idea behind iShares Core 1 5 and Ocean Park International 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.