Correlation Between IShares Global and FleetPartners

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

Diversification Opportunities for IShares Global and FleetPartners

0.05

Correlation Coefficient

IShares Global  FleetPartners

Significant diversification

The 3 months correlation between IShares and FleetPartners is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and FleetPartners Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FleetPartners Group 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 FleetPartners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FleetPartners Group has no effect on the direction of IShares Global i.e., IShares Global and FleetPartners go up and down completely randomly.

Pair Corralation between IShares Global and FleetPartners

Assuming the 90 days trading horizon iShares Global Healthcare is expected to generate 0.4 times more return on investment than FleetPartners. However, iShares Global Healthcare is 2.53 times less risky than FleetPartners. It trades about 0.01 of its potential returns per unit of risk. FleetPartners Group is currently generating about -0.1 per unit of risk. If you would invest  13,881  in iShares Global Healthcare on September 29, 2024 and sell it today you would earn a total of  42.00  from holding iShares Global Healthcare or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

iShares Global Healthcare  vs.  FleetPartners Group

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.

FleetPartners Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FleetPartners Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with IShares Global and FleetPartners

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

The idea behind iShares Global Healthcare and FleetPartners Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.