Correlation Between Manager Directed and IShares Global

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

By analyzing existing cross correlation between Manager Directed Portfolios and iShares Global Healthcare, you can compare the effects of market volatilities on Manager Directed and IShares Global 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 Manager Directed with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manager Directed and IShares Global.

Diversification Opportunities for Manager Directed and IShares Global

0.13

Correlation Coefficient

Manager Directed  IShares Global

Average diversification

The 3 months correlation between Manager and IShares is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Manager Directed Portfolios and iShares Global Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Healthcare and Manager Directed 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 Manager Directed Portfolios are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Healthcare has no effect on the direction of Manager Directed i.e., Manager Directed and IShares Global go up and down completely randomly.

Pair Corralation between Manager Directed and IShares Global

Given the investment horizon of 90 days Manager Directed Portfolios is expected to generate 0.03 times more return on investment than IShares Global. However, Manager Directed Portfolios is 32.4 times less risky than IShares Global. It trades about 0.38 of its potential returns per unit of risk. iShares Global Healthcare is currently generating about -0.01 per unit of risk. If you would invest  2,767  in Manager Directed Portfolios on May 7, 2025 and sell it today you would earn a total of  22.00  from holding Manager Directed Portfolios or generate 0.8% return on investment over 90 days.

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

Manager Directed Portfolios  vs.  iShares Global Healthcare

Manager Directed Por

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Manager Directed Portfolios are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Manager Directed is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

iShares Global Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Global Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, IShares Global is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Manager Directed and IShares Global

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

The idea behind Manager Directed Portfolios and iShares Global Healthcare 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.