Correlation Between Oatly Group and IShares MSCI

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

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

Diversification Opportunities for Oatly Group and IShares MSCI

-0.42

Correlation Coefficient

Oatly Group  IShares MSCI

Very good diversification

The 3 months correlation between Oatly and IShares is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and iShares MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI and Oatly Group 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 Oatly Group AB are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI has no effect on the direction of Oatly Group i.e., Oatly Group and IShares MSCI go up and down completely randomly.

Pair Corralation between Oatly Group and IShares MSCI

Given the investment horizon of 90 days Oatly Group AB is expected to under-perform the IShares MSCI. In addition to that, Oatly Group is 4.92 times more volatile than iShares MSCI. It trades about -0.03 of its total potential returns per unit of risk. iShares MSCI is currently generating about 0.07 per unit of volatility. If you would invest  28.00  in iShares MSCI on October 11, 2024 and sell it today you would earn a total of  11.00  from holding iShares MSCI or generate 39.29% return on investment over 90 days.

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

Oatly Group AB  vs.  iShares MSCI

Oatly Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oatly Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

iShares MSCI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, IShares MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Oatly Group and IShares MSCI

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

The idea behind Oatly Group AB and iShares MSCI 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.