Correlation Between IShares Trust and Chemours

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

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

Diversification Opportunities for IShares Trust and Chemours

0.31

Correlation Coefficient

IShares Trust  Chemours

Weak diversification

The 3 months correlation between IShares and Chemours is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and The Chemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of IShares Trust i.e., IShares Trust and Chemours go up and down completely randomly.

Pair Corralation between IShares Trust and Chemours

Assuming the 90 days trading horizon iShares Trust is expected to generate 1.03 times more return on investment than Chemours. However, IShares Trust is 1.03 times more volatile than The Chemours. It trades about 0.11 of its potential returns per unit of risk. The Chemours is currently generating about -0.01 per unit of risk. If you would invest  141,803  in iShares Trust on October 12, 2024 and sell it today you would earn a total of  43,174  from holding iShares Trust or generate 30.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.24%
Values	Daily Returns

iShares Trust   vs.  The Chemours

iShares Trust

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, IShares Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with IShares Trust and Chemours

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

The idea behind iShares Trust and The Chemours 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.