Correlation Between IShares VII and Expat Romania

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

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

Diversification Opportunities for IShares VII and Expat Romania

-0.27

Correlation Coefficient

IShares VII  Expat Romania

Very good diversification

The 3 months correlation between IShares and Expat is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and Expat Romania BET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expat Romania BET and IShares VII 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 VII PLC are associated (or correlated) with Expat Romania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expat Romania BET has no effect on the direction of IShares VII i.e., IShares VII and Expat Romania go up and down completely randomly.

Pair Corralation between IShares VII and Expat Romania

Assuming the 90 days trading horizon iShares VII PLC is expected to generate 1.24 times more return on investment than Expat Romania. However, IShares VII is 1.24 times more volatile than Expat Romania BET. It trades about 0.06 of its potential returns per unit of risk. Expat Romania BET is currently generating about -0.02 per unit of risk. If you would invest  22,600  in iShares VII PLC on September 15, 2024 and sell it today you would earn a total of  1,940  from holding iShares VII PLC or generate 8.58% return on investment over 90 days.

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

iShares VII PLC  vs.  Expat Romania BET

iShares VII PLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares VII PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IShares VII may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Expat Romania BET

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expat Romania BET has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Expat Romania is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares VII and Expat Romania

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

The idea behind iShares VII PLC and Expat Romania BET 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.