Correlation Between IShares V and Groupe Sfpi

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

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

Diversification Opportunities for IShares V and Groupe Sfpi

0.88

Correlation Coefficient

IShares V  Groupe Sfpi

Very poor diversification

The 3 months correlation between IShares and Groupe is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares V PLC and Groupe Sfpi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Sfpi and IShares V 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 V PLC are associated (or correlated) with Groupe Sfpi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Sfpi has no effect on the direction of IShares V i.e., IShares V and Groupe Sfpi go up and down completely randomly.

Pair Corralation between IShares V and Groupe Sfpi

Assuming the 90 days trading horizon IShares V is expected to generate 47.52 times less return on investment than Groupe Sfpi. But when comparing it to its historical volatility, iShares V PLC is 18.59 times less risky than Groupe Sfpi. It trades about 0.07 of its potential returns per unit of risk. Groupe Sfpi is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  199.00  in Groupe Sfpi on April 22, 2025 and sell it today you would earn a total of  39.00  from holding Groupe Sfpi or generate 19.6% return on investment over 90 days.

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

iShares V PLC  vs.  Groupe Sfpi

iShares V PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares V PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares V is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Groupe Sfpi

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe Sfpi are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Groupe Sfpi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares V and Groupe Sfpi

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

The idea behind iShares V PLC and Groupe Sfpi 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.