Correlation Between IShares Core and Brookstone Value

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

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

Diversification Opportunities for IShares Core and Brookstone Value

0.97

Correlation Coefficient

IShares Core  Brookstone Value

Almost no diversification

The 3 months correlation between IShares and Brookstone is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Dividend and Brookstone Value Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookstone Value Stock and IShares Core 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 Core Dividend are associated (or correlated) with Brookstone Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookstone Value Stock has no effect on the direction of IShares Core i.e., IShares Core and Brookstone Value go up and down completely randomly.

Pair Corralation between IShares Core and Brookstone Value

Given the investment horizon of 90 days IShares Core is expected to generate 1.31 times less return on investment than Brookstone Value. But when comparing it to its historical volatility, iShares Core Dividend is 1.16 times less risky than Brookstone Value. It trades about 0.15 of its potential returns per unit of risk. Brookstone Value Stock is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,072  in Brookstone Value Stock on September 3, 2024 and sell it today you would earn a total of  242.00  from holding Brookstone Value Stock or generate 7.88% return on investment over 90 days.

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

iShares Core Dividend  vs.  Brookstone Value Stock

iShares Core Dividend

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Dividend are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Brookstone Value Stock

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookstone Value Stock are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, Brookstone Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Core and Brookstone Value

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

The idea behind iShares Core Dividend and Brookstone Value Stock 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 Global Correlations module to find global opportunities by holding instruments from different markets.