Correlation Between IShares Trust and Engie Brasil

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

By analyzing existing cross correlation between iShares Trust and Engie Brasil Energia, you can compare the effects of market volatilities on IShares Trust and Engie Brasil 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 Engie Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Engie Brasil.

Diversification Opportunities for IShares Trust and Engie Brasil

-0.65

Correlation Coefficient

IShares Trust  Engie Brasil

Excellent diversification

The 3 months correlation between IShares and Engie is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Engie Brasil Energia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Brasil Energia 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 Engie Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Brasil Energia has no effect on the direction of IShares Trust i.e., IShares Trust and Engie Brasil go up and down completely randomly.

Pair Corralation between IShares Trust and Engie Brasil

Assuming the 90 days trading horizon iShares Trust is expected to under-perform the Engie Brasil. In addition to that, IShares Trust is 1.5 times more volatile than Engie Brasil Energia. It trades about -0.07 of its total potential returns per unit of risk. Engie Brasil Energia is currently generating about 0.17 per unit of volatility. If you would invest  3,550  in Engie Brasil Energia on December 29, 2024 and sell it today you would earn a total of  357.00  from holding Engie Brasil Energia or generate 10.06% return on investment over 90 days.

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

iShares Trust   vs.  Engie Brasil Energia

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 latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Engie Brasil Energia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Engie Brasil Energia are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Engie Brasil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IShares Trust and Engie Brasil

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

The idea behind iShares Trust and Engie Brasil Energia 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.