Correlation Between IShares Core and Guardian Directed

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

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

Diversification Opportunities for IShares Core and Guardian Directed

0.95

Correlation Coefficient

IShares Core  Guardian Directed

Almost no diversification

The 3 months correlation between IShares and Guardian is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Equity and Guardian Directed Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Directed Equity 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 Equity are associated (or correlated) with Guardian Directed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Directed Equity has no effect on the direction of IShares Core i.e., IShares Core and Guardian Directed go up and down completely randomly.

Pair Corralation between IShares Core and Guardian Directed

Assuming the 90 days trading horizon iShares Core Equity is expected to generate 1.01 times more return on investment than Guardian Directed. However, IShares Core is 1.01 times more volatile than Guardian Directed Equity. It trades about 0.32 of its potential returns per unit of risk. Guardian Directed Equity is currently generating about 0.03 per unit of risk. If you would invest  3,382  in iShares Core Equity on September 12, 2024 and sell it today you would earn a total of  104.00  from holding iShares Core Equity or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

iShares Core Equity  vs.  Guardian Directed Equity

iShares Core Equity

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Equity are ranked lower than 22 (%) 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.

Guardian Directed Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Directed Equity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Guardian Directed 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 Guardian Directed

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

The idea behind iShares Core Equity and Guardian Directed Equity 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.