Correlation Between IM Global and ETF Series

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

By analyzing existing cross correlation between IM Global Partner and ETF Series Solutions, you can compare the effects of market volatilities on IM Global and ETF Series 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 IM Global with a short position of ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of IM Global and ETF Series.

Diversification Opportunities for IM Global and ETF Series

0.5

Correlation Coefficient

IM Global  ETF Series

Very weak diversification

The 3 months correlation between IRBA and ETF is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding IM Global Partner and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions and IM 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 IM Global Partner are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of IM Global i.e., IM Global and ETF Series go up and down completely randomly.

Pair Corralation between IM Global and ETF Series

If you would invest  3,213  in ETF Series Solutions on September 15, 2024 and sell it today you would earn a total of  299.00  from holding ETF Series Solutions or generate 9.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

IM Global Partner  vs.  ETF Series Solutions

IM Global Partner

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IM Global Partner has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, IM Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ETF Series Solutions

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, ETF Series may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IM Global and ETF Series

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

The idea behind IM Global Partner and ETF Series Solutions 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.