Correlation Between IShares BBB and Mairs Power

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

By analyzing existing cross correlation between iShares BBB Rated and Mairs Power Minnesota, you can compare the effects of market volatilities on IShares BBB and Mairs Power 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 BBB with a short position of Mairs Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares BBB and Mairs Power.

Diversification Opportunities for IShares BBB and Mairs Power

0.82

Correlation Coefficient

IShares BBB  Mairs Power

Very poor diversification

The 3 months correlation between IShares and Mairs is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares BBB Rated and Mairs Power Minnesota in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mairs Power Minnesota and IShares BBB 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 BBB Rated are associated (or correlated) with Mairs Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mairs Power Minnesota has no effect on the direction of IShares BBB i.e., IShares BBB and Mairs Power go up and down completely randomly.

Pair Corralation between IShares BBB and Mairs Power

Given the investment horizon of 90 days iShares BBB Rated is expected to under-perform the Mairs Power. But the etf apears to be less risky and, when comparing its historical volatility, iShares BBB Rated is 1.22 times less risky than Mairs Power. The etf trades about -0.01 of its potential returns per unit of risk. The Mairs Power Minnesota is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,200  in Mairs Power Minnesota on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Mairs Power Minnesota or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

iShares BBB Rated  vs.  Mairs Power Minnesota

iShares BBB Rated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares BBB Rated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, IShares BBB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mairs Power Minnesota

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mairs Power Minnesota are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mairs Power is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares BBB and Mairs Power

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

The idea behind iShares BBB Rated and Mairs Power Minnesota 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.