Correlation Between IShares 1 and Ninepoint Energy

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

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

Diversification Opportunities for IShares 1 and Ninepoint Energy

-0.66

Correlation Coefficient

IShares 1  Ninepoint Energy

Excellent diversification

The 3 months correlation between IShares and Ninepoint is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 5 Year and Ninepoint Energy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninepoint Energy Income and IShares 1 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 1 5 Year are associated (or correlated) with Ninepoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninepoint Energy Income has no effect on the direction of IShares 1 i.e., IShares 1 and Ninepoint Energy go up and down completely randomly.

Pair Corralation between IShares 1 and Ninepoint Energy

Assuming the 90 days trading horizon IShares 1 is expected to generate 2.98 times less return on investment than Ninepoint Energy. But when comparing it to its historical volatility, iShares 1 5 Year is 8.11 times less risky than Ninepoint Energy. It trades about 0.1 of its potential returns per unit of risk. Ninepoint Energy Income is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,912  in Ninepoint Energy Income on September 2, 2024 and sell it today you would earn a total of  50.00  from holding Ninepoint Energy Income or generate 2.62% return on investment over 90 days.

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

iShares 1 5 Year  vs.  Ninepoint Energy Income

iShares 1 5

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 1 5 Year are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IShares 1 is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ninepoint Energy Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ninepoint Energy Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Ninepoint Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares 1 and Ninepoint Energy

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

The idea behind iShares 1 5 Year and Ninepoint Energy Income 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.