Correlation Between IShares Global and SAP SE
Can any of the company-specific risk be diversified away by investing in both IShares Global and SAP SE 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 Global and SAP SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Timber and SAP SE, you can compare the effects of market volatilities on IShares Global and SAP SE 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 Global with a short position of SAP SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and SAP SE.
Diversification Opportunities for IShares Global and SAP SE
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and SAP is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Timber and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and IShares Global 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 Global Timber are associated (or correlated) with SAP SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of IShares Global i.e., IShares Global and SAP SE go up and down completely randomly.
Pair Corralation between IShares Global and SAP SE
Assuming the 90 days trading horizon iShares Global Timber is expected to generate 1.6 times more return on investment than SAP SE. However, IShares Global is 1.6 times more volatile than SAP SE. It trades about 0.24 of its potential returns per unit of risk. SAP SE is currently generating about -0.24 per unit of risk. If you would invest 177,917 in iShares Global Timber on October 9, 2024 and sell it today you would earn a total of 680.00 from holding iShares Global Timber or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Timber vs. SAP SE
Performance |
| Timeline |
| iShares Global Timber |
| SAP SE |
IShares Global and SAP SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and SAP SE
The main advantage of trading using opposite IShares Global and SAP SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, SAP SE 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 SAP SE will offset losses from the drop in SAP SE's long position.| IShares Global vs. iShares Trust | IShares Global vs. iShares Trust | IShares Global vs. iShares Trust | IShares Global vs. iShares Trust |
| SAP SE vs. Adobe Inc | SAP SE vs. The Select Sector | SAP SE vs. Promotora y Operadora | SAP SE vs. iShares Global Timber |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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