Correlation Between IShares SP and Alumexx NV
Can any of the company-specific risk be diversified away by investing in both IShares SP and Alumexx NV 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 SP and Alumexx NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and Alumexx NV, you can compare the effects of market volatilities on IShares SP and Alumexx NV 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 SP with a short position of Alumexx NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Alumexx NV.
Diversification Opportunities for IShares SP and Alumexx NV
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Alumexx is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and Alumexx NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumexx NV and IShares SP 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 SP 500 are associated (or correlated) with Alumexx NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumexx NV has no effect on the direction of IShares SP i.e., IShares SP and Alumexx NV go up and down completely randomly.
Pair Corralation between IShares SP and Alumexx NV
Assuming the 90 days trading horizon IShares SP is expected to generate 1.89 times less return on investment than Alumexx NV. But when comparing it to its historical volatility, iShares SP 500 is 4.15 times less risky than Alumexx NV. It trades about 0.12 of its potential returns per unit of risk. Alumexx NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 69.00 in Alumexx NV on September 2, 2024 and sell it today you would earn a total of 61.00 from holding Alumexx NV or generate 88.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.81% |
| Values | Daily Returns |
iShares SP 500 vs. Alumexx NV
Performance |
| Timeline |
| iShares SP 500 |
| Alumexx NV |
IShares SP and Alumexx NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and Alumexx NV
The main advantage of trading using opposite IShares SP and Alumexx NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, Alumexx NV 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 Alumexx NV will offset losses from the drop in Alumexx NV's long position.| IShares SP vs. Vanguard SP 500 | IShares SP vs. SPDR Dow Jones | IShares SP vs. iShares Core MSCI | IShares SP vs. iShares SP 500 |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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