Correlation Between Plains All and IShares Preferred
Can any of the company-specific risk be diversified away by investing in both Plains All and IShares Preferred 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 Plains All and IShares Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plains All American and iShares Preferred and, you can compare the effects of market volatilities on Plains All and IShares Preferred 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 Plains All with a short position of IShares Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plains All and IShares Preferred.
Diversification Opportunities for Plains All and IShares Preferred
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Plains and IShares is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Plains All American and iShares Preferred and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Preferred and Plains All 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 Plains All American are associated (or correlated) with IShares Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Preferred has no effect on the direction of Plains All i.e., Plains All and IShares Preferred go up and down completely randomly.
Pair Corralation between Plains All and IShares Preferred
Considering the 90-day investment horizon Plains All American is expected to generate 2.02 times more return on investment than IShares Preferred. However, Plains All is 2.02 times more volatile than iShares Preferred and. It trades about 0.1 of its potential returns per unit of risk. iShares Preferred and is currently generating about 0.05 per unit of risk. If you would invest 1,020 in Plains All American on September 3, 2024 and sell it today you would earn a total of 847.00 from holding Plains All American or generate 83.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plains All American vs. iShares Preferred and
Performance |
| Timeline |
| Plains All American |
| iShares Preferred |
Plains All and IShares Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plains All and IShares Preferred
The main advantage of trading using opposite Plains All and IShares Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plains All position performs unexpectedly, IShares Preferred 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 Preferred will offset losses from the drop in IShares Preferred's long position.| Plains All vs. Genesis Energy LP | Plains All vs. Western Midstream Partners | Plains All vs. Hess Midstream Partners | Plains All vs. Enterprise Products Partners |
| IShares Preferred vs. Invesco Preferred ETF | IShares Preferred vs. iShares iBoxx High | IShares Preferred vs. Invesco Financial Preferred | IShares Preferred vs. SPDR Bloomberg 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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