Correlation Between IShares VII and Ease2pay

Can any of the company-specific risk be diversified away by investing in both IShares VII and Ease2pay 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 VII and Ease2pay into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares VII Public and Ease2pay NV, you can compare the effects of market volatilities on IShares VII and Ease2pay 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 VII with a short position of Ease2pay. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and Ease2pay.

Diversification Opportunities for IShares VII and Ease2pay

0.53

Correlation Coefficient

IShares VII  Ease2pay

Very weak diversification

The 3 months correlation between IShares and Ease2pay is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII Public and Ease2pay NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ease2pay NV and IShares VII 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 VII Public are associated (or correlated) with Ease2pay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ease2pay NV has no effect on the direction of IShares VII i.e., IShares VII and Ease2pay go up and down completely randomly.

Pair Corralation between IShares VII and Ease2pay

Assuming the 90 days trading horizon iShares VII Public is expected to generate 0.4 times more return on investment than Ease2pay. However, iShares VII Public is 2.51 times less risky than Ease2pay. It trades about -0.02 of its potential returns per unit of risk. Ease2pay NV is currently generating about -0.08 per unit of risk. If you would invest  12,953  in iShares VII Public on September 21, 2024 and sell it today you would lose (276.00) from holding iShares VII Public or give up 2.13% of portfolio value over 90 days.

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

iShares VII Public  vs.  Ease2pay NV

iShares VII Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ease2pay NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ease2pay NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with IShares VII and Ease2pay

The main advantage of trading using opposite IShares VII and Ease2pay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII position performs unexpectedly, Ease2pay 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 Ease2pay will offset losses from the drop in Ease2pay's long position.

The idea behind iShares VII Public and Ease2pay NV 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.