Correlation Between IShares Global and Rayliant Quantitative

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

By analyzing existing cross correlation between iShares Global 100 and Rayliant Quantitative Developed, you can compare the effects of market volatilities on IShares Global and Rayliant Quantitative 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 Global with a short position of Rayliant Quantitative. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Rayliant Quantitative.

Diversification Opportunities for IShares Global and Rayliant Quantitative

0.84

Correlation Coefficient

IShares Global  Rayliant Quantitative

Very poor diversification

The 3 months correlation between IShares and Rayliant is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global 100 and Rayliant Quantitative Develope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayliant Quantitative and IShares Global 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 Global 100 are associated (or correlated) with Rayliant Quantitative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayliant Quantitative has no effect on the direction of IShares Global i.e., IShares Global and Rayliant Quantitative go up and down completely randomly.

Pair Corralation between IShares Global and Rayliant Quantitative

Considering the 90-day investment horizon IShares Global is expected to generate 1.76 times less return on investment than Rayliant Quantitative. In addition to that, IShares Global is 1.28 times more volatile than Rayliant Quantitative Developed. It trades about 0.11 of its total potential returns per unit of risk. Rayliant Quantitative Developed is currently generating about 0.24 per unit of volatility. If you would invest  2,977  in Rayliant Quantitative Developed on September 2, 2024 and sell it today you would earn a total of  292.00  from holding Rayliant Quantitative Developed or generate 9.81% return on investment over 90 days.

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

iShares Global 100  vs.  Rayliant Quantitative Develope

iShares Global 100

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global 100 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Global is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Rayliant Quantitative

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rayliant Quantitative Developed are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Rayliant Quantitative may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Global and Rayliant Quantitative

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

The idea behind iShares Global 100 and Rayliant Quantitative Developed 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..