Correlation Between IShares Global and Credit Clear

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

By analyzing existing cross correlation between iShares Global Healthcare and Credit Clear, you can compare the effects of market volatilities on IShares Global and Credit Clear 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 Credit Clear. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Credit Clear.

Diversification Opportunities for IShares Global and Credit Clear

-0.32

Correlation Coefficient

IShares Global  Credit Clear

Very good diversification

The 3 months correlation between IShares and Credit is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Credit Clear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Clear 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 Healthcare are associated (or correlated) with Credit Clear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Clear has no effect on the direction of IShares Global i.e., IShares Global and Credit Clear go up and down completely randomly.

Pair Corralation between IShares Global and Credit Clear

Assuming the 90 days trading horizon iShares Global Healthcare is expected to under-perform the Credit Clear. But the etf apears to be less risky and, when comparing its historical volatility, iShares Global Healthcare is 4.29 times less risky than Credit Clear. The etf trades about -0.07 of its potential returns per unit of risk. The Credit Clear is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Credit Clear on September 25, 2024 and sell it today you would earn a total of  3.00  from holding Credit Clear or generate 10.0% return on investment over 90 days.

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

iShares Global Healthcare  vs.  Credit Clear

iShares Global Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Credit Clear

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Clear are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Credit Clear may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Global and Credit Clear

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

The idea behind iShares Global Healthcare and Credit Clear 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.