Correlation Between HANetf ICAV and Source Markets

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

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

Diversification Opportunities for HANetf ICAV and Source Markets

-0.71

Correlation Coefficient

HANetf ICAV  Source Markets

Pay attention - limited upside

The 3 months correlation between HANetf and Source is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding HANetf ICAV and Source Markets plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Source Markets plc 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 Source Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Source Markets plc has no effect on the direction of HANetf ICAV i.e., HANetf ICAV and Source Markets go up and down completely randomly.

Pair Corralation between HANetf ICAV and Source Markets

Assuming the 90 days trading horizon HANetf ICAV is expected to under-perform the Source Markets. In addition to that, HANetf ICAV is 1.83 times more volatile than Source Markets plc. It trades about -0.19 of its total potential returns per unit of risk. Source Markets plc is currently generating about -0.07 per unit of volatility. If you would invest  27,150  in Source Markets plc on October 15, 2024 and sell it today you would lose (300.00) from holding Source Markets plc or give up 1.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

HANetf ICAV   vs.  Source Markets plc

HANetf ICAV

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HANetf ICAV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, HANetf ICAV reported solid returns over the last few months and may actually be approaching a breakup point.

Source Markets plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Source Markets plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with HANetf ICAV and Source Markets

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

The idea behind HANetf ICAV and Source Markets plc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.