Correlation Between Picton Mahoney and IShares Global

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

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

Diversification Opportunities for Picton Mahoney and IShares Global

-0.41

Correlation Coefficient

Picton Mahoney  IShares Global

Very good diversification

The 3 months correlation between Picton and IShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Picton Mahoney Fortified and iShares Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Real and Picton Mahoney 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 Picton Mahoney Fortified are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Real has no effect on the direction of Picton Mahoney i.e., Picton Mahoney and IShares Global go up and down completely randomly.

Pair Corralation between Picton Mahoney and IShares Global

Assuming the 90 days trading horizon Picton Mahoney Fortified is expected to generate 0.51 times more return on investment than IShares Global. However, Picton Mahoney Fortified is 1.95 times less risky than IShares Global. It trades about 0.09 of its potential returns per unit of risk. iShares Global Real is currently generating about -0.18 per unit of risk. If you would invest  1,176  in Picton Mahoney Fortified on September 23, 2024 and sell it today you would earn a total of  11.00  from holding Picton Mahoney Fortified or generate 0.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Picton Mahoney Fortified  vs.  iShares Global Real

Picton Mahoney Fortified

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Picton Mahoney Fortified are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Picton Mahoney is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Picton Mahoney and IShares Global

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

The idea behind Picton Mahoney Fortified and iShares Global Real 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.