Correlation Between IShares and Sparinvest INDEX

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

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

Diversification Opportunities for IShares and Sparinvest INDEX

0.0

Correlation Coefficient

IShares  Sparinvest INDEX

Pay attention - limited upside

The 3 months correlation between IShares and Sparinvest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IShares and Sparinvest INDEX Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest INDEX Emerging and IShares 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 are associated (or correlated) with Sparinvest INDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest INDEX Emerging has no effect on the direction of IShares i.e., IShares and Sparinvest INDEX go up and down completely randomly.

Pair Corralation between IShares and Sparinvest INDEX

If you would invest (100.00) in IShares on January 24, 2024 and sell it today you would earn a total of  100.00  from holding IShares or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

IShares  vs.  Sparinvest INDEX Emerging

IShares

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sparinvest INDEX Emerging

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest INDEX Emerging are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent primary indicators, Sparinvest INDEX is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares and Sparinvest INDEX

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

The idea behind IShares and Sparinvest INDEX Emerging 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.