Correlation Between ETF Series and IM Global

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

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

Diversification Opportunities for ETF Series and IM Global

0.5

Correlation Coefficient

ETF Series  IM Global

Very weak diversification

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

Pair Corralation between ETF Series and IM Global

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

ETF Series Solutions  vs.  IM Global Partner

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.

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.

Pair Trading with ETF Series and IM Global

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

The idea behind ETF Series Solutions and IM Global Partner 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.