Correlation Between IQ Healthy and IShares Cybersecurity

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

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

Diversification Opportunities for IQ Healthy and IShares Cybersecurity

-0.44

Correlation Coefficient

IQ Healthy  IShares Cybersecurity

Very good diversification

The 3 months correlation between HART and IShares is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding IQ Healthy Hearts and iShares Cybersecurity and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Cybersecurity and and IQ Healthy 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 IQ Healthy Hearts are associated (or correlated) with IShares Cybersecurity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Cybersecurity and has no effect on the direction of IQ Healthy i.e., IQ Healthy and IShares Cybersecurity go up and down completely randomly.

Pair Corralation between IQ Healthy and IShares Cybersecurity

Given the investment horizon of 90 days IQ Healthy Hearts is expected to generate 0.44 times more return on investment than IShares Cybersecurity. However, IQ Healthy Hearts is 2.29 times less risky than IShares Cybersecurity. It trades about 0.01 of its potential returns per unit of risk. iShares Cybersecurity and is currently generating about -0.01 per unit of risk. If you would invest  3,179  in IQ Healthy Hearts on September 13, 2024 and sell it today you would earn a total of  1.00  from holding IQ Healthy Hearts or generate 0.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

IQ Healthy Hearts  vs.  iShares Cybersecurity and

IQ Healthy Hearts

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares Cybersecurity and

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with IQ Healthy and IShares Cybersecurity

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

The idea behind IQ Healthy Hearts and iShares Cybersecurity 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.