Correlation Between IShares Core and Guardian International

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

By analyzing existing cross correlation between iShares Core MSCI and Guardian International Equity, you can compare the effects of market volatilities on IShares Core and Guardian International 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 Core with a short position of Guardian International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Guardian International.

Diversification Opportunities for IShares Core and Guardian International

0.45

Correlation Coefficient

IShares Core  Guardian International

Very weak diversification

The 3 months correlation between IShares and Guardian is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Guardian International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian International and IShares Core 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 Core MSCI are associated (or correlated) with Guardian International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian International has no effect on the direction of IShares Core i.e., IShares Core and Guardian International go up and down completely randomly.

Pair Corralation between IShares Core and Guardian International

Assuming the 90 days trading horizon iShares Core MSCI is expected to generate 0.85 times more return on investment than Guardian International. However, iShares Core MSCI is 1.18 times less risky than Guardian International. It trades about 0.02 of its potential returns per unit of risk. Guardian International Equity is currently generating about -0.05 per unit of risk. If you would invest  3,850  in iShares Core MSCI on September 17, 2024 and sell it today you would earn a total of  34.00  from holding iShares Core MSCI or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

iShares Core MSCI  vs.  Guardian International Equity

iShares Core MSCI

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Guardian International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardian International Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Guardian International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and Guardian International

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

The idea behind iShares Core MSCI and Guardian International Equity 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.