Correlation Between IShares Core and Clarkston Founders

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

By analyzing existing cross correlation between iShares Core SP and Clarkston Founders, you can compare the effects of market volatilities on IShares Core and Clarkston Founders 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 Clarkston Founders. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Clarkston Founders.

Diversification Opportunities for IShares Core and Clarkston Founders

0.72

Correlation Coefficient

IShares Core  Clarkston Founders

Poor diversification

The 3 months correlation between IShares and Clarkston is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Clarkston Founders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkston Founders 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 SP are associated (or correlated) with Clarkston Founders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkston Founders has no effect on the direction of IShares Core i.e., IShares Core and Clarkston Founders go up and down completely randomly.

Pair Corralation between IShares Core and Clarkston Founders

Given the investment horizon of 90 days iShares Core SP is expected to under-perform the Clarkston Founders. In addition to that, IShares Core is 1.32 times more volatile than Clarkston Founders. It trades about -0.08 of its total potential returns per unit of risk. Clarkston Founders is currently generating about -0.02 per unit of volatility. If you would invest  1,595  in Clarkston Founders on December 30, 2024 and sell it today you would lose (17.00) from holding Clarkston Founders or give up 1.07% of portfolio value over 90 days.

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

iShares Core SP  vs.  Clarkston Founders

iShares Core SP

Risk-Adjusted Performance

Very Weak

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

Clarkston Founders

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares Core and Clarkston Founders

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

The idea behind iShares Core SP and Clarkston Founders 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.