Correlation Between IShares Global and Hub24

Can any of the company-specific risk be diversified away by investing in both IShares Global and Hub24 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 Hub24 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 Hub24, you can compare the effects of market volatilities on IShares Global and Hub24 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 Hub24. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Hub24.

Diversification Opportunities for IShares Global and Hub24

-0.33

Correlation Coefficient

IShares Global  Hub24

Very good diversification

The 3 months correlation between IShares and Hub24 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Hub24 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub24 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 Hub24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub24 has no effect on the direction of IShares Global i.e., IShares Global and Hub24 go up and down completely randomly.

Pair Corralation between IShares Global and Hub24

Assuming the 90 days trading horizon iShares Global Healthcare is expected to generate 0.39 times more return on investment than Hub24. However, iShares Global Healthcare is 2.55 times less risky than Hub24. It trades about -0.2 of its potential returns per unit of risk. Hub24 is currently generating about -0.27 per unit of risk. If you would invest  14,146  in iShares Global Healthcare on October 6, 2024 and sell it today you would lose (413.00) from holding iShares Global Healthcare or give up 2.92% 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.  Hub24

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.

Hub24

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hub24 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Hub24 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Global and Hub24

The main advantage of trading using opposite IShares Global and Hub24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, Hub24 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 Hub24 will offset losses from the drop in Hub24's long position.

The idea behind iShares Global Healthcare and Hub24 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.