Correlation Between Financial Investors and IShares India
Can any of the company-specific risk be diversified away by investing in both Financial Investors and IShares India 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 Financial Investors and IShares India into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Investors Trust and iShares India 50, you can compare the effects of market volatilities on Financial Investors and IShares India 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 Financial Investors with a short position of IShares India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Investors and IShares India.
Diversification Opportunities for Financial Investors and IShares India
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Financial and IShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Financial Investors Trust and iShares India 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares India 50 and Financial Investors 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 Financial Investors Trust are associated (or correlated) with IShares India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares India 50 has no effect on the direction of Financial Investors i.e., Financial Investors and IShares India go up and down completely randomly.
Pair Corralation between Financial Investors and IShares India
Assuming the 90 days horizon Financial Investors Trust is expected to under-perform the IShares India. In addition to that, Financial Investors is 2.47 times more volatile than iShares India 50. It trades about -0.17 of its total potential returns per unit of risk. iShares India 50 is currently generating about -0.13 per unit of volatility. If you would invest 5,305 in iShares India 50 on November 1, 2024 and sell it today you would lose (306.00) from holding iShares India 50 or give up 5.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Investors Trust vs. iShares India 50
Performance |
| Timeline |
| Financial Investors Trust |
| iShares India 50 |
Financial Investors and IShares India Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Investors and IShares India
The main advantage of trading using opposite Financial Investors and IShares India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Investors position performs unexpectedly, IShares India 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 India will offset losses from the drop in IShares India's long position.| Financial Investors vs. ALPSSmith Credit Opportunities | Financial Investors vs. ALPSSmith Credit Opportunities | Financial Investors vs. DEUTSCHE MID CAP | Financial Investors vs. DEUTSCHE MID CAP |
| IShares India vs. iShares MSCI India | IShares India vs. Invesco India ETF | IShares India vs. iShares MSCI India | IShares India vs. WisdomTree India Earnings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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