Correlation Between HANetf ICAV and HANetf II

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

By analyzing existing cross correlation between HANetf ICAV and HANetf II ICAV, you can compare the effects of market volatilities on HANetf ICAV and HANetf II 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 HANetf ICAV with a short position of HANetf II. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANetf ICAV and HANetf II.

Diversification Opportunities for HANetf ICAV and HANetf II

0.7

Correlation Coefficient

HANetf ICAV  HANetf II

Poor diversification

The 3 months correlation between HANetf and HANetf is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding HANetf ICAV and HANetf II ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANetf II ICAV and HANetf ICAV 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 HANetf ICAV are associated (or correlated) with HANetf II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANetf II ICAV has no effect on the direction of HANetf ICAV i.e., HANetf ICAV and HANetf II go up and down completely randomly.

Pair Corralation between HANetf ICAV and HANetf II

Assuming the 90 days trading horizon HANetf ICAV is expected to generate 3.63 times more return on investment than HANetf II. However, HANetf ICAV is 3.63 times more volatile than HANetf II ICAV. It trades about 0.12 of its potential returns per unit of risk. HANetf II ICAV is currently generating about 0.22 per unit of risk. If you would invest  1,330  in HANetf ICAV on October 7, 2024 and sell it today you would earn a total of  111.00  from holding HANetf ICAV or generate 8.35% return on investment over 90 days.

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

HANetf ICAV   vs.  HANetf II ICAV

HANetf ICAV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HANetf ICAV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, HANetf ICAV reported solid returns over the last few months and may actually be approaching a breakup point.

HANetf II ICAV

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HANetf II ICAV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, HANetf II is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HANetf ICAV and HANetf II

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

The idea behind HANetf ICAV and HANetf II ICAV 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.