Correlation Between LG Battery and IShares VII
Can any of the company-specific risk be diversified away by investing in both LG Battery and IShares VII 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 LG Battery and IShares VII into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Battery Value Chain and iShares VII PLC, you can compare the effects of market volatilities on LG Battery and IShares VII 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 LG Battery with a short position of IShares VII. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Battery and IShares VII.
Diversification Opportunities for LG Battery and IShares VII
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BATE and IShares is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding LG Battery Value Chain and iShares VII PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares VII PLC and LG Battery 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 LG Battery Value Chain are associated (or correlated) with IShares VII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares VII PLC has no effect on the direction of LG Battery i.e., LG Battery and IShares VII go up and down completely randomly.
Pair Corralation between LG Battery and IShares VII
Assuming the 90 days trading horizon LG Battery Value Chain is expected to under-perform the IShares VII. In addition to that, LG Battery is 1.05 times more volatile than iShares VII PLC. It trades about -0.01 of its total potential returns per unit of risk. iShares VII PLC is currently generating about 0.07 per unit of volatility. If you would invest 24,330 in iShares VII PLC on November 5, 2024 and sell it today you would earn a total of 325.00 from holding iShares VII PLC or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
LG Battery Value Chain vs. iShares VII PLC
Performance |
| Timeline |
| LG Battery Value |
| iShares VII PLC |
LG Battery and IShares VII Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Battery and IShares VII
The main advantage of trading using opposite LG Battery and IShares VII positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Battery position performs unexpectedly, IShares VII 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 IShares VII will offset losses from the drop in IShares VII's long position.| LG Battery vs. LG Battery Value Chain | LG Battery vs. iShares Govt Bond | LG Battery vs. Amundi MSCI Europe | LG Battery vs. iShares Global AAA AA |
| IShares VII vs. iShares Govt Bond | IShares VII vs. iShares Global AAA AA | IShares VII vs. iShares Smart City | IShares VII vs. iShares Broad High |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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