Correlation Between IShares Core and Forstrong Global

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

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

Diversification Opportunities for IShares Core and Forstrong Global

0.76

Correlation Coefficient

IShares Core  Forstrong Global

Poor diversification

The 3 months correlation between IShares and Forstrong is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SPTSX and Forstrong Global Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forstrong Global Income 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 SPTSX are associated (or correlated) with Forstrong Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forstrong Global Income has no effect on the direction of IShares Core i.e., IShares Core and Forstrong Global go up and down completely randomly.

Pair Corralation between IShares Core and Forstrong Global

Assuming the 90 days trading horizon iShares Core SPTSX is expected to generate 1.9 times more return on investment than Forstrong Global. However, IShares Core is 1.9 times more volatile than Forstrong Global Income. It trades about 0.35 of its potential returns per unit of risk. Forstrong Global Income is currently generating about 0.1 per unit of risk. If you would invest  3,658  in iShares Core SPTSX on August 31, 2024 and sell it today you would earn a total of  424.00  from holding iShares Core SPTSX or generate 11.59% return on investment over 90 days.

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

iShares Core SPTSX  vs.  Forstrong Global Income

iShares Core SPTSX

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SPTSX are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Forstrong Global Income

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Forstrong Global Income are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Forstrong Global 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 Forstrong Global

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

The idea behind iShares Core SPTSX and Forstrong Global Income 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.