Correlation Between IShares Fundamental and DelphX Capital

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

By analyzing existing cross correlation between iShares Fundamental Hedged and DelphX Capital Markets, you can compare the effects of market volatilities on IShares Fundamental and DelphX Capital 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 Fundamental with a short position of DelphX Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Fundamental and DelphX Capital.

Diversification Opportunities for IShares Fundamental and DelphX Capital

-0.47

Correlation Coefficient

IShares Fundamental  DelphX Capital

Very good diversification

The 3 months correlation between IShares and DelphX is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and DelphX Capital Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DelphX Capital Markets and IShares Fundamental 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 Fundamental Hedged are associated (or correlated) with DelphX Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DelphX Capital Markets has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and DelphX Capital go up and down completely randomly.

Pair Corralation between IShares Fundamental and DelphX Capital

Assuming the 90 days trading horizon iShares Fundamental Hedged is expected to generate 0.09 times more return on investment than DelphX Capital. However, iShares Fundamental Hedged is 11.06 times less risky than DelphX Capital. It trades about 0.0 of its potential returns per unit of risk. DelphX Capital Markets is currently generating about -0.01 per unit of risk. If you would invest  5,434  in iShares Fundamental Hedged on September 22, 2024 and sell it today you would lose (2.00) from holding iShares Fundamental Hedged or give up 0.04% of portfolio value over 90 days.

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

iShares Fundamental Hedged  vs.  DelphX Capital Markets

iShares Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

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

DelphX Capital Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DelphX Capital Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, DelphX Capital is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Fundamental and DelphX Capital

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

The idea behind iShares Fundamental Hedged and DelphX Capital Markets 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.