Correlation Between IShares Global and Bendigo

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

Diversification Opportunities for IShares Global and Bendigo

-0.54

Correlation Coefficient

IShares Global  Bendigo

Excellent diversification

The 3 months correlation between IShares and Bendigo is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Bendigo And Adelaide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bendigo And Adelaide 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 Bendigo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bendigo And Adelaide has no effect on the direction of IShares Global i.e., IShares Global and Bendigo go up and down completely randomly.

Pair Corralation between IShares Global and Bendigo

Assuming the 90 days trading horizon iShares Global Healthcare is expected to generate 0.57 times more return on investment than Bendigo. However, iShares Global Healthcare is 1.77 times less risky than Bendigo. It trades about -0.08 of its potential returns per unit of risk. Bendigo And Adelaide is currently generating about -0.19 per unit of risk. If you would invest  13,868  in iShares Global Healthcare on September 24, 2024 and sell it today you would lose (161.00) from holding iShares Global Healthcare or give up 1.16% of portfolio value over 90 days.

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

iShares Global Healthcare  vs.  Bendigo And Adelaide

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.

Bendigo And Adelaide

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bendigo And Adelaide are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bendigo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Global and Bendigo

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

The idea behind iShares Global Healthcare and Bendigo And Adelaide 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.