Correlation Between IShares Trust and Companhia Habitasul

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

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

Diversification Opportunities for IShares Trust and Companhia Habitasul

0.51

Correlation Coefficient

IShares Trust  Companhia Habitasul

Very weak diversification

The 3 months correlation between IShares and Companhia is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Companhia Habitasul de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Habitasul 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 Companhia Habitasul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Habitasul has no effect on the direction of IShares Trust i.e., IShares Trust and Companhia Habitasul go up and down completely randomly.

Pair Corralation between IShares Trust and Companhia Habitasul

Assuming the 90 days trading horizon iShares Trust is expected to under-perform the Companhia Habitasul. But the etf apears to be less risky and, when comparing its historical volatility, iShares Trust is 1.22 times less risky than Companhia Habitasul. The etf trades about -0.03 of its potential returns per unit of risk. The Companhia Habitasul de is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,902  in Companhia Habitasul de on December 4, 2024 and sell it today you would earn a total of  98.00  from holding Companhia Habitasul de or generate 3.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

iShares Trust   vs.  Companhia Habitasul de

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.

Companhia Habitasul

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Habitasul de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Companhia Habitasul is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Trust and Companhia Habitasul

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

The idea behind iShares Trust and Companhia Habitasul de 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.