Correlation Between Inspire International and Inspire Faithward
Can any of the company-specific risk be diversified away by investing in both Inspire International and Inspire Faithward 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 Inspire International and Inspire Faithward into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspire International ESG and Inspire Faithward Mid, you can compare the effects of market volatilities on Inspire International and Inspire Faithward 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 Inspire International with a short position of Inspire Faithward. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire International and Inspire Faithward.
Diversification Opportunities for Inspire International and Inspire Faithward
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Inspire and Inspire is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Inspire International ESG and Inspire Faithward Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Faithward Mid and Inspire International 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 Inspire International ESG are associated (or correlated) with Inspire Faithward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Faithward Mid has no effect on the direction of Inspire International i.e., Inspire International and Inspire Faithward go up and down completely randomly.
Pair Corralation between Inspire International and Inspire Faithward
Given the investment horizon of 90 days Inspire International is expected to generate 1.92 times less return on investment than Inspire Faithward. But when comparing it to its historical volatility, Inspire International ESG is 1.08 times less risky than Inspire Faithward. It trades about 0.05 of its potential returns per unit of risk. Inspire Faithward Mid is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,288 in Inspire Faithward Mid on August 29, 2024 and sell it today you would earn a total of 1,020 from holding Inspire Faithward Mid or generate 44.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inspire International ESG vs. Inspire Faithward Mid
Performance |
| Timeline |
| Inspire International ESG |
| Inspire Faithward Mid |
Inspire International and Inspire Faithward Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspire International and Inspire Faithward
The main advantage of trading using opposite Inspire International and Inspire Faithward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire International position performs unexpectedly, Inspire Faithward 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 Inspire Faithward will offset losses from the drop in Inspire Faithward's long position.| Inspire International vs. Northern Lights | Inspire International vs. Inspire SmallMid Cap | Inspire International vs. Inspire Global Hope | Inspire International vs. Inspire Tactical Balanced |
| Inspire Faithward vs. Northern Lights | Inspire Faithward vs. Inspire Tactical Balanced | Inspire Faithward vs. Inspire International ESG | Inspire Faithward vs. Inspire SmallMid Cap |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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