Correlation Between IShares Global and Argo Investments

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

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

Diversification Opportunities for IShares Global and Argo Investments

-0.24

Correlation Coefficient

IShares Global  Argo Investments

Very good diversification

The 3 months correlation between IShares and Argo is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Argo Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Investments 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 Healthcare are associated (or correlated) with Argo Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Investments has no effect on the direction of IShares Global i.e., IShares Global and Argo Investments go up and down completely randomly.

Pair Corralation between IShares Global and Argo Investments

Assuming the 90 days trading horizon iShares Global Healthcare is expected to under-perform the Argo Investments. In addition to that, IShares Global is 1.12 times more volatile than Argo Investments. It trades about -0.09 of its total potential returns per unit of risk. Argo Investments is currently generating about -0.04 per unit of volatility. If you would invest  916.00  in Argo Investments on October 11, 2024 and sell it today you would lose (5.00) from holding Argo Investments or give up 0.55% of portfolio value over 90 days.

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

iShares Global Healthcare  vs.  Argo Investments

iShares Global Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Argo Investments

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Argo Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Global and Argo Investments

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

The idea behind iShares Global Healthcare and Argo Investments 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.