Correlation Between IShares Swiss and IShares SMIM

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

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

Diversification Opportunities for IShares Swiss and IShares SMIM

0.78

Correlation Coefficient

IShares Swiss  IShares SMIM

Poor diversification

The 3 months correlation between IShares and IShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares Swiss Dividend and iShares SMIM ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SMIM ETF and IShares Swiss 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 Swiss Dividend are associated (or correlated) with IShares SMIM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SMIM ETF has no effect on the direction of IShares Swiss i.e., IShares Swiss and IShares SMIM go up and down completely randomly.

Pair Corralation between IShares Swiss and IShares SMIM

Assuming the 90 days trading horizon IShares Swiss is expected to generate 2.22 times less return on investment than IShares SMIM. In addition to that, IShares Swiss is 1.09 times more volatile than iShares SMIM ETF. It trades about 0.07 of its total potential returns per unit of risk. iShares SMIM ETF is currently generating about 0.16 per unit of volatility. If you would invest  27,145  in iShares SMIM ETF on September 16, 2024 and sell it today you would earn a total of  480.00  from holding iShares SMIM ETF or generate 1.77% return on investment over 90 days.

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

iShares Swiss Dividend  vs.  iShares SMIM ETF

iShares Swiss Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Swiss Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Swiss is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares SMIM ETF

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Swiss and IShares SMIM

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

The idea behind iShares Swiss Dividend and iShares SMIM ETF 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.