Correlation Between IShares Core and CIMB SP
Can any of the company-specific risk be diversified away by investing in both IShares Core and CIMB SP 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 CIMB SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and CIMB SP Ethical, you can compare the effects of market volatilities on IShares Core and CIMB SP 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 CIMB SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and CIMB SP.
Diversification Opportunities for IShares Core and CIMB SP
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and CIMB is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and CIMB SP Ethical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMB SP Ethical 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 SP are associated (or correlated) with CIMB SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMB SP Ethical has no effect on the direction of IShares Core i.e., IShares Core and CIMB SP go up and down completely randomly.
Pair Corralation between IShares Core and CIMB SP
Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.87 times more return on investment than CIMB SP. However, iShares Core SP is 1.15 times less risky than CIMB SP. It trades about 0.15 of its potential returns per unit of risk. CIMB SP Ethical is currently generating about 0.13 per unit of risk. If you would invest 45,010 in iShares Core SP on September 4, 2024 and sell it today you would earn a total of 16,010 from holding iShares Core SP or generate 35.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. CIMB SP Ethical
Performance |
| Timeline |
| iShares Core SP |
| CIMB SP Ethical |
IShares Core and CIMB SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and CIMB SP
The main advantage of trading using opposite IShares Core and CIMB SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, CIMB SP 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 CIMB SP will offset losses from the drop in CIMB SP's long position.| IShares Core vs. iShares Govt Bond | IShares Core vs. iShares Global AAA AA | IShares Core vs. iShares Smart City | IShares Core vs. iShares Broad High |
| CIMB SP vs. iShares Govt Bond | CIMB SP vs. Amundi MSCI Europe | CIMB SP vs. iShares Global AAA AA | CIMB SP vs. iShares Smart City |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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