Correlation Between Chemours and IShares Trust

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

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

Diversification Opportunities for Chemours and IShares Trust

0.66

Correlation Coefficient

Chemours  IShares Trust

Poor diversification

The 3 months correlation between Chemours and IShares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Chemours and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Chemours 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 The Chemours are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Chemours i.e., Chemours and IShares Trust go up and down completely randomly.

Pair Corralation between Chemours and IShares Trust

Assuming the 90 days horizon The Chemours is expected to under-perform the IShares Trust. In addition to that, Chemours is 1.02 times more volatile than iShares Trust . It trades about -0.01 of its total potential returns per unit of risk. iShares Trust is currently generating about 0.14 per unit of volatility. If you would invest  222,636  in iShares Trust on October 12, 2024 and sell it today you would earn a total of  105,564  from holding iShares Trust or generate 47.42% return on investment over 90 days.

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

The Chemours  vs.  iShares Trust

Chemours

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Chemours are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Chemours may actually be approaching a critical reversion point that can send shares even higher in February 2025.

iShares Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IShares Trust may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Chemours and IShares Trust

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

The idea behind The Chemours and iShares Trust 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.