Correlation Between MULTI UNITS and IShares Core

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

By analyzing existing cross correlation between MULTI UNITS LUXEMBOURG and iShares Core Corp, you can compare the effects of market volatilities on MULTI UNITS and IShares Core 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 MULTI UNITS with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of MULTI UNITS and IShares Core.

Diversification Opportunities for MULTI UNITS and IShares Core

0.46

Correlation Coefficient

MULTI UNITS  IShares Core

Very weak diversification

The 3 months correlation between MULTI and IShares is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MULTI UNITS LUXEMBOURG and iShares Core Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Corp and MULTI UNITS 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 MULTI UNITS LUXEMBOURG are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Corp has no effect on the direction of MULTI UNITS i.e., MULTI UNITS and IShares Core go up and down completely randomly.

Pair Corralation between MULTI UNITS and IShares Core

Assuming the 90 days trading horizon MULTI UNITS LUXEMBOURG is expected to generate 4.17 times more return on investment than IShares Core. However, MULTI UNITS is 4.17 times more volatile than iShares Core Corp. It trades about 0.08 of its potential returns per unit of risk. iShares Core Corp is currently generating about 0.07 per unit of risk. If you would invest  13,670  in MULTI UNITS LUXEMBOURG on October 2, 2024 and sell it today you would earn a total of  4,430  from holding MULTI UNITS LUXEMBOURG or generate 32.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

MULTI UNITS LUXEMBOURG   vs.  iShares Core Corp

MULTI UNITS LUXEMBOURG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MULTI UNITS LUXEMBOURG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, MULTI UNITS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares Core Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with MULTI UNITS and IShares Core

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

The idea behind MULTI UNITS LUXEMBOURG and iShares Core Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.