Correlation Between Inspire International and Inspire Global

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

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

Diversification Opportunities for Inspire International and Inspire Global

0.72

Correlation Coefficient

Inspire International  Inspire Global

Poor diversification

The 3 months correlation between Inspire and Inspire is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Inspire International ESG and Inspire Global Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Global Hope and Inspire International 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 Inspire International ESG are associated (or correlated) with Inspire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Global Hope has no effect on the direction of Inspire International i.e., Inspire International and Inspire Global go up and down completely randomly.

Pair Corralation between Inspire International and Inspire Global

Given the investment horizon of 90 days Inspire International ESG is expected to generate 0.92 times more return on investment than Inspire Global. However, Inspire International ESG is 1.08 times less risky than Inspire Global. It trades about -0.22 of its potential returns per unit of risk. Inspire Global Hope is currently generating about -0.32 per unit of risk. If you would invest  3,006  in Inspire International ESG on October 3, 2024 and sell it today you would lose (106.00) from holding Inspire International ESG or give up 3.53% of portfolio value over 90 days.

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

Inspire International ESG  vs.  Inspire Global Hope

Inspire International ESG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspire International ESG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's forward-looking indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Inspire Global Hope

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspire Global Hope has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Inspire Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Inspire International and Inspire Global

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

The idea behind Inspire International ESG and Inspire Global Hope 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.