Correlation Between IShares Global and Gtn

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

Diversification Opportunities for IShares Global and Gtn

-0.22

Correlation Coefficient

IShares Global  Gtn

Very good diversification

The 3 months correlation between IShares and Gtn is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Gtn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gtn 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 Gtn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gtn has no effect on the direction of IShares Global i.e., IShares Global and Gtn go up and down completely randomly.

Pair Corralation between IShares Global and Gtn

Assuming the 90 days trading horizon IShares Global is expected to generate 5.26 times less return on investment than Gtn. But when comparing it to its historical volatility, iShares Global Healthcare is 4.67 times less risky than Gtn. It trades about 0.04 of its potential returns per unit of risk. Gtn is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Gtn on September 26, 2024 and sell it today you would earn a total of  23.00  from holding Gtn or generate 65.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

iShares Global Healthcare  vs.  Gtn

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.

Gtn

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gtn are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Gtn unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Global and Gtn

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

The idea behind iShares Global Healthcare and Gtn 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.