Correlation Between IShares Core and Regents Park

Can any of the company-specific risk be diversified away by investing in both IShares Core and Regents Park 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 Regents Park into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Core Moderate and Regents Park Hedged, you can compare the effects of market volatilities on IShares Core and Regents Park 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 Regents Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Regents Park.

Diversification Opportunities for IShares Core and Regents Park

0.85

Correlation Coefficient

IShares Core  Regents Park

Very poor diversification

The 3 months correlation between IShares and Regents is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Moderate and Regents Park Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regents Park Hedged 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 Moderate are associated (or correlated) with Regents Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regents Park Hedged has no effect on the direction of IShares Core i.e., IShares Core and Regents Park go up and down completely randomly.

Pair Corralation between IShares Core and Regents Park

Considering the 90-day investment horizon IShares Core is expected to generate 5.37 times less return on investment than Regents Park. But when comparing it to its historical volatility, iShares Core Moderate is 1.52 times less risky than Regents Park. It trades about 0.09 of its potential returns per unit of risk. Regents Park Hedged is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,018  in Regents Park Hedged on July 20, 2024 and sell it today you would earn a total of  34.00  from holding Regents Park Hedged or generate 3.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

iShares Core Moderate  vs.  Regents Park Hedged

iShares Core Moderate

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Moderate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Regents Park Hedged

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regents Park Hedged are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Regents Park is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Core and Regents Park

The main advantage of trading using opposite IShares Core and Regents Park positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Regents Park 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 Regents Park will offset losses from the drop in Regents Park's long position.

The idea behind iShares Core Moderate and Regents Park Hedged pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.