Correlation Between IShares Breakthrough and Eco Tek

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

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

Diversification Opportunities for IShares Breakthrough and Eco Tek

-0.07

Correlation Coefficient

IShares Breakthrough  Eco Tek

Good diversification

The 3 months correlation between IShares and Eco is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding iShares Breakthrough Environme and Eco Tek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Tek Group and IShares Breakthrough 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 Breakthrough Environmental are associated (or correlated) with Eco Tek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Tek Group has no effect on the direction of IShares Breakthrough i.e., IShares Breakthrough and Eco Tek go up and down completely randomly.

Pair Corralation between IShares Breakthrough and Eco Tek

Given the investment horizon of 90 days IShares Breakthrough is expected to generate 172.53 times less return on investment than Eco Tek. But when comparing it to its historical volatility, iShares Breakthrough Environmental is 20.58 times less risky than Eco Tek. It trades about 0.02 of its potential returns per unit of risk. Eco Tek Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Eco Tek Group on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Eco Tek Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

iShares Breakthrough Environme  vs.  Eco Tek Group

iShares Breakthrough

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Breakthrough Environmental are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, IShares Breakthrough is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Eco Tek Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Tek Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal technical and fundamental indicators, Eco Tek disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Breakthrough and Eco Tek

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

The idea behind iShares Breakthrough Environmental and Eco Tek Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.