Correlation Between Themes European and IShares Dividend

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

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

Diversification Opportunities for Themes European and IShares Dividend

-0.64

Correlation Coefficient

Themes European  IShares Dividend

Excellent diversification

The 3 months correlation between Themes and IShares is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Themes European Luxury and iShares Dividend and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Dividend and Themes European 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 Themes European Luxury are associated (or correlated) with IShares Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Dividend has no effect on the direction of Themes European i.e., Themes European and IShares Dividend go up and down completely randomly.

Pair Corralation between Themes European and IShares Dividend

Given the investment horizon of 90 days Themes European Luxury is expected to under-perform the IShares Dividend. In addition to that, Themes European is 1.81 times more volatile than iShares Dividend and. It trades about -0.02 of its total potential returns per unit of risk. iShares Dividend and is currently generating about 0.08 per unit of volatility. If you would invest  3,526  in iShares Dividend and on October 9, 2024 and sell it today you would earn a total of  1,221  from holding iShares Dividend and or generate 34.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	51.86%
Values	Daily Returns

Themes European Luxury  vs.  iShares Dividend and

Themes European Luxury

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Themes European Luxury has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Themes European is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Themes European and IShares Dividend

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

The idea behind Themes European Luxury and iShares Dividend and 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.