Correlation Between HE Equipment and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both HE Equipment and IShares MSCI 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 HE Equipment and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and iShares MSCI EAFE, you can compare the effects of market volatilities on HE Equipment and IShares MSCI 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 HE Equipment with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and IShares MSCI.
Diversification Opportunities for HE Equipment and IShares MSCI
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HEES and IShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and iShares MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI EAFE and HE Equipment 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 HE Equipment Services are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI EAFE has no effect on the direction of HE Equipment i.e., HE Equipment and IShares MSCI go up and down completely randomly.
Pair Corralation between HE Equipment and IShares MSCI
Given the investment horizon of 90 days HE Equipment Services is expected to under-perform the IShares MSCI. In addition to that, HE Equipment is 2.52 times more volatile than iShares MSCI EAFE. It trades about -0.17 of its total potential returns per unit of risk. iShares MSCI EAFE is currently generating about -0.17 per unit of volatility. If you would invest 6,304 in iShares MSCI EAFE on January 26, 2024 and sell it today you would lose (179.00) from holding iShares MSCI EAFE or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. iShares MSCI EAFE
Performance |
| Timeline |
| HE Equipment Services |
| iShares MSCI EAFE |
HE Equipment and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and IShares MSCI
The main advantage of trading using opposite HE Equipment and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| HE Equipment vs. Ryder System | HE Equipment vs. The Aarons | HE Equipment vs. Alta Equipment Group | HE Equipment vs. GATX Corporation |
| IShares MSCI vs. iShares MSCI China | IShares MSCI vs. iShares Dividend and | IShares MSCI vs. iShares MSCI Frontier | IShares MSCI vs. iShares Short Maturity |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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