Correlation Between IQ Healthy and IShares Global
Can any of the company-specific risk be diversified away by investing in both IQ Healthy and IShares Global 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 Global 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 Global Timber, you can compare the effects of market volatilities on IQ Healthy and IShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ Healthy and IShares Global.
Diversification Opportunities for IQ Healthy and IShares Global
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HART and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding IQ Healthy Hearts and iShares Global Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Timber 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Timber has no effect on the direction of IQ Healthy i.e., IQ Healthy and IShares Global go up and down completely randomly.
Pair Corralation between IQ Healthy and IShares Global
Given the investment horizon of 90 days IQ Healthy Hearts is expected to generate 0.63 times more return on investment than IShares Global. However, IQ Healthy Hearts is 1.58 times less risky than IShares Global. It trades about -0.02 of its potential returns per unit of risk. iShares Global Timber is currently generating about -0.03 per unit of risk. If you would invest 3,149 in IQ Healthy Hearts on October 10, 2024 and sell it today you would lose (50.50) from holding IQ Healthy Hearts or give up 1.6% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 99.2% |
Values | Daily Returns |
IQ Healthy Hearts vs. iShares Global Timber
Performance |
Timeline |
IQ Healthy Hearts |
iShares Global Timber |
IQ Healthy and IShares Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IQ Healthy and IShares Global
The main advantage of trading using opposite IQ Healthy and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Healthy position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.The idea behind IQ Healthy Hearts and iShares Global Timber 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.IShares Global vs. First Trust Exchange Traded | IShares Global vs. Ultimus Managers Trust | IShares Global vs. Horizon Kinetics Medical | IShares Global vs. Harbor Health Care |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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