Correlation Between IShares Property and DGB Group

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

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

Diversification Opportunities for IShares Property and DGB Group

0.64

Correlation Coefficient

IShares Property  DGB Group

Poor diversification

The 3 months correlation between IShares and DGB is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares Property Yield and DGB Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGB Group NV and IShares Property 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 Property Yield are associated (or correlated) with DGB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGB Group NV has no effect on the direction of IShares Property i.e., IShares Property and DGB Group go up and down completely randomly.

Pair Corralation between IShares Property and DGB Group

Assuming the 90 days trading horizon iShares Property Yield is expected to under-perform the DGB Group. But the etf apears to be less risky and, when comparing its historical volatility, iShares Property Yield is 3.72 times less risky than DGB Group. The etf trades about -0.02 of its potential returns per unit of risk. The DGB Group NV is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  73.00  in DGB Group NV on September 21, 2024 and sell it today you would earn a total of  12.00  from holding DGB Group NV or generate 16.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

iShares Property Yield  vs.  DGB Group NV

iShares Property Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Property Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

DGB Group NV

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DGB Group NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, DGB Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Property and DGB Group

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

The idea behind iShares Property Yield and DGB Group NV 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.