Correlation Between Eco Tek and IShares Breakthrough

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

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

Diversification Opportunities for Eco Tek and IShares Breakthrough

-0.07

Correlation Coefficient

Eco Tek  IShares Breakthrough

Good diversification

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

Pair Corralation between Eco Tek and IShares Breakthrough

Given the investment horizon of 90 days Eco Tek Group is expected to generate 13.88 times more return on investment than IShares Breakthrough. However, Eco Tek is 13.88 times more volatile than iShares Breakthrough Environmental. It trades about 0.08 of its potential returns per unit of risk. iShares Breakthrough Environmental is currently generating about -0.03 per unit of risk. If you would invest  0.08  in Eco Tek Group on September 4, 2024 and sell it today you would lose (0.06) from holding Eco Tek Group or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.43%
Values	Daily Returns

Eco Tek Group  vs.  iShares Breakthrough Environme

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.

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.

Pair Trading with Eco Tek and IShares Breakthrough

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

The idea behind Eco Tek Group and iShares Breakthrough Environmental 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 Channel module to use Commodity Channel Index to analyze current equity momentum.