Correlation Between Index International and Assetwise Public

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

By analyzing existing cross correlation between Index International Group and Assetwise Public, you can compare the effects of market volatilities on Index International and Assetwise Public 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 Index International with a short position of Assetwise Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Index International and Assetwise Public.

Diversification Opportunities for Index International and Assetwise Public

-0.37

Correlation Coefficient

Index International  Assetwise Public

Very good diversification

The 3 months correlation between Index and Assetwise is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Index International Group and Assetwise Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assetwise Public and Index International 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 Index International Group are associated (or correlated) with Assetwise Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assetwise Public has no effect on the direction of Index International i.e., Index International and Assetwise Public go up and down completely randomly.

Pair Corralation between Index International and Assetwise Public

Assuming the 90 days trading horizon Index International Group is expected to under-perform the Assetwise Public. In addition to that, Index International is 2.53 times more volatile than Assetwise Public. It trades about -0.04 of its total potential returns per unit of risk. Assetwise Public is currently generating about 0.02 per unit of volatility. If you would invest  751.00  in Assetwise Public on September 24, 2024 and sell it today you would earn a total of  49.00  from holding Assetwise Public or generate 6.52% return on investment over 90 days.

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

Index International Group  vs.  Assetwise Public

Index International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Index International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Index International is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Assetwise Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Assetwise Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Assetwise Public is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Index International and Assetwise Public

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

The idea behind Index International Group and Assetwise Public 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.