Correlation Between IShares Core and Fm 3

Can any of the company-specific risk be diversified away by investing in both IShares Core and Fm 3 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 Fm 3 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 Fm 3 Year Investment, you can compare the effects of market volatilities on IShares Core and Fm 3 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 Fm 3. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Fm 3.

Diversification Opportunities for IShares Core and Fm 3

0.98

Correlation Coefficient

IShares Core  Fm 3

Almost no diversification

The 3 months correlation between IShares and ZTRE is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core 1 5 and Fm 3 Year Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fm 3 Year 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 Fm 3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fm 3 Year has no effect on the direction of IShares Core i.e., IShares Core and Fm 3 go up and down completely randomly.

Pair Corralation between IShares Core and Fm 3

Given the investment horizon of 90 days iShares Core 1 5 is expected to generate 0.96 times more return on investment than Fm 3. However, iShares Core 1 5 is 1.04 times less risky than Fm 3. It trades about 0.24 of its potential returns per unit of risk. Fm 3 Year Investment is currently generating about 0.22 per unit of risk. If you would invest  4,744  in iShares Core 1 5 on December 28, 2024 and sell it today you would earn a total of  78.00  from holding iShares Core 1 5 or generate 1.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

iShares Core 1 5  vs.  Fm 3 Year Investment

iShares Core 1

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core 1 5 are ranked lower than 18 (%) 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.

Fm 3 Year

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fm 3 Year Investment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Fm 3 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Core and Fm 3

The main advantage of trading using opposite IShares Core and Fm 3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Fm 3 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 Fm 3 will offset losses from the drop in Fm 3's long position.

The idea behind iShares Core 1 5 and Fm 3 Year Investment 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.