Correlation Between IShares Currency and IShares

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

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

Diversification Opportunities for IShares Currency and IShares

0.68

Correlation Coefficient

IShares Currency  IShares

Poor diversification

The 3 months correlation between IShares and IShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares Currency Hedged and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares and IShares Currency 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 Currency Hedged are associated (or correlated) with IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of IShares Currency i.e., IShares Currency and IShares go up and down completely randomly.

Pair Corralation between IShares Currency and IShares

Given the investment horizon of 90 days iShares Currency Hedged is expected to generate 1.16 times more return on investment than IShares. However, IShares Currency is 1.16 times more volatile than IShares. It trades about 0.04 of its potential returns per unit of risk. IShares is currently generating about 0.01 per unit of risk. If you would invest  2,354  in iShares Currency Hedged on October 10, 2024 and sell it today you would earn a total of  347.00  from holding iShares Currency Hedged or generate 14.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	26.06%
Values	Daily Returns

iShares Currency Hedged  vs.  IShares

iShares Currency Hedged

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Currency Hedged has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, IShares Currency is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

IShares

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Currency and IShares

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

The idea behind iShares Currency Hedged and IShares 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.