Correlation Between IShares Trust and Sendas Distribuidora

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

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

Diversification Opportunities for IShares Trust and Sendas Distribuidora

-0.53

Correlation Coefficient

IShares Trust  Sendas Distribuidora

Excellent diversification

The 3 months correlation between IShares and Sendas is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Sendas Distribuidora SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sendas Distribuidora and IShares Trust 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 Trust are associated (or correlated) with Sendas Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sendas Distribuidora has no effect on the direction of IShares Trust i.e., IShares Trust and Sendas Distribuidora go up and down completely randomly.

Pair Corralation between IShares Trust and Sendas Distribuidora

Assuming the 90 days trading horizon IShares Trust is expected to generate 30.21 times less return on investment than Sendas Distribuidora. But when comparing it to its historical volatility, iShares Trust is 1.77 times less risky than Sendas Distribuidora. It trades about 0.01 of its potential returns per unit of risk. Sendas Distribuidora SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  569.00  in Sendas Distribuidora SA on December 23, 2024 and sell it today you would earn a total of  189.00  from holding Sendas Distribuidora SA or generate 33.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

iShares Trust   vs.  Sendas Distribuidora SA

iShares Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sendas Distribuidora

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sendas Distribuidora SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sendas Distribuidora unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Trust and Sendas Distribuidora

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

The idea behind iShares Trust and Sendas Distribuidora SA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.