Correlation Between IShares Core and CI ONE

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

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

Diversification Opportunities for IShares Core and CI ONE

0.94

Correlation Coefficient

IShares Core  CI ONE

Almost no diversification

The 3 months correlation between IShares and ONEQ is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and CI ONE Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI ONE Global and IShares Core 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 Core MSCI are associated (or correlated) with CI ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI ONE Global has no effect on the direction of IShares Core i.e., IShares Core and CI ONE go up and down completely randomly.

Pair Corralation between IShares Core and CI ONE

Assuming the 90 days trading horizon iShares Core MSCI is expected to generate 0.84 times more return on investment than CI ONE. However, iShares Core MSCI is 1.18 times less risky than CI ONE. It trades about 0.25 of its potential returns per unit of risk. CI ONE Global is currently generating about 0.15 per unit of risk. If you would invest  4,221  in iShares Core MSCI on September 15, 2024 and sell it today you would earn a total of  385.00  from holding iShares Core MSCI or generate 9.12% return on investment over 90 days.

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

iShares Core MSCI  vs.  CI ONE Global

iShares Core MSCI

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CI ONE Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI ONE Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI ONE is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and CI ONE

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

The idea behind iShares Core MSCI and CI ONE Global 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.