Correlation Between IShares 20 and Bunge

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Can any of the company-specific risk be diversified away by investing in both IShares 20 and Bunge 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 20 and Bunge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IShares 20 Year and Bunge Limited, you can compare the effects of market volatilities on IShares 20 and Bunge 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 20 with a short position of Bunge. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 20 and Bunge.

Diversification Opportunities for IShares 20 and Bunge

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between IShares and Bunge is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding IShares 20 Year and Bunge Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge Limited and IShares 20 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 20 Year are associated (or correlated) with Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge Limited has no effect on the direction of IShares 20 i.e., IShares 20 and Bunge go up and down completely randomly.

Pair Corralation between IShares 20 and Bunge

Considering the 90-day investment horizon IShares 20 Year is expected to under-perform the Bunge. But the etf apears to be less risky and, when comparing its historical volatility, IShares 20 Year is 1.63 times less risky than Bunge. The etf trades about -0.03 of its potential returns per unit of risk. The Bunge Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  11,249  in Bunge Limited on December 29, 2023 and sell it today you would lose (1,007) from holding Bunge Limited or give up 8.95% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

IShares 20 Year  vs.  Bunge Limited

 Performance 
       Timeline  
IShares 20 Year 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days IShares 20 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, IShares 20 is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Bunge Limited 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Bunge Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Bunge is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

IShares 20 and Bunge Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares 20 and Bunge

The main advantage of trading using opposite IShares 20 and Bunge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 20 position performs unexpectedly, Bunge 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 Bunge will offset losses from the drop in Bunge's long position.
The idea behind IShares 20 Year and Bunge Limited 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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