Correlation Between Carbon Collective and IShares 1

Can any of the company-specific risk be diversified away by investing in both Carbon Collective and IShares 1 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 Carbon Collective and IShares 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carbon Collective Short and iShares 1 5 Year, you can compare the effects of market volatilities on Carbon Collective and IShares 1 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 Carbon Collective with a short position of IShares 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carbon Collective and IShares 1.

Diversification Opportunities for Carbon Collective and IShares 1

0.35

Correlation Coefficient

Carbon Collective  IShares 1

Weak diversification

The 3 months correlation between Carbon and IShares is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Carbon Collective Short and iShares 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 5 and Carbon Collective 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 Carbon Collective Short are associated (or correlated) with IShares 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 5 has no effect on the direction of Carbon Collective i.e., Carbon Collective and IShares 1 go up and down completely randomly.

Pair Corralation between Carbon Collective and IShares 1

Given the investment horizon of 90 days Carbon Collective Short is expected to generate 0.91 times more return on investment than IShares 1. However, Carbon Collective Short is 1.1 times less risky than IShares 1. It trades about 0.11 of its potential returns per unit of risk. iShares 1 5 Year is currently generating about 0.02 per unit of risk. If you would invest  2,023  in Carbon Collective Short on September 12, 2024 and sell it today you would earn a total of  18.00  from holding Carbon Collective Short or generate 0.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Carbon Collective Short  vs.  iShares 1 5 Year

Carbon Collective Short

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Collective Short are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Carbon Collective is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares 1 5

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 1 5 Year are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares 1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Carbon Collective and IShares 1

The main advantage of trading using opposite Carbon Collective and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carbon Collective position performs unexpectedly, IShares 1 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 1 will offset losses from the drop in IShares 1's long position.

The idea behind Carbon Collective Short and iShares 1 5 Year 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.