Correlation Between Purpose High and IShares Premium

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

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

Diversification Opportunities for Purpose High and IShares Premium

1.0

Correlation Coefficient

Purpose High  IShares Premium

No risk reduction

The 3 months correlation between Purpose and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Purpose High Interest and iShares Premium Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Premium Money and Purpose High 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 Purpose High Interest are associated (or correlated) with IShares Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Premium Money has no effect on the direction of Purpose High i.e., Purpose High and IShares Premium go up and down completely randomly.

Pair Corralation between Purpose High and IShares Premium

Assuming the 90 days trading horizon Purpose High is expected to generate 1.03 times less return on investment than IShares Premium. But when comparing it to its historical volatility, Purpose High Interest is 1.15 times less risky than IShares Premium. It trades about 0.92 of its potential returns per unit of risk. iShares Premium Money is currently generating about 0.82 of returns per unit of risk over similar time horizon. If you would invest  4,963  in iShares Premium Money on October 13, 2024 and sell it today you would earn a total of  44.00  from holding iShares Premium Money or generate 0.89% return on investment over 90 days.

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

Purpose High Interest  vs.  iShares Premium Money

Purpose High Interest

Risk-Adjusted Performance

72 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose High Interest are ranked lower than 72 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Purpose High is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares Premium Money

Risk-Adjusted Performance

64 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Premium Money are ranked lower than 64 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Premium is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Purpose High and IShares Premium

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

The idea behind Purpose High Interest and iShares Premium Money 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.