Correlation Between IShares VII and Hydratec Industries

Can any of the company-specific risk be diversified away by investing in both IShares VII and Hydratec Industries 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 Hydratec Industries 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 Hydratec Industries NV, you can compare the effects of market volatilities on IShares VII and Hydratec Industries 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 Hydratec Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and Hydratec Industries.

Diversification Opportunities for IShares VII and Hydratec Industries

-0.33

Correlation Coefficient

IShares VII  Hydratec Industries

Very good diversification

The 3 months correlation between IShares and Hydratec is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII Public and Hydratec Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydratec Industries 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 Hydratec Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydratec Industries has no effect on the direction of IShares VII i.e., IShares VII and Hydratec Industries go up and down completely randomly.

Pair Corralation between IShares VII and Hydratec Industries

Assuming the 90 days trading horizon iShares VII Public is expected to under-perform the Hydratec Industries. But the etf apears to be less risky and, when comparing its historical volatility, iShares VII Public is 1.69 times less risky than Hydratec Industries. The etf trades about -0.02 of its potential returns per unit of risk. The Hydratec Industries NV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  14,000  in Hydratec Industries NV on September 19, 2024 and sell it today you would earn a total of  2,000  from holding Hydratec Industries NV or generate 14.29% return on investment over 90 days.

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

iShares VII Public  vs.  Hydratec Industries 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.

Hydratec Industries

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hydratec Industries NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Hydratec Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares VII and Hydratec Industries

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

The idea behind iShares VII Public and Hydratec Industries 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 Commodity Directory module to find actively traded commodities issued by global exchanges.