Correlation Between IShares Blockchain and Capital Group

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

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

Diversification Opportunities for IShares Blockchain and Capital Group

0.86

Correlation Coefficient

IShares Blockchain  Capital Group

Very poor diversification

The 3 months correlation between IShares and Capital is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares Blockchain and and Capital Group Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Core and IShares Blockchain 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 Blockchain and are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Core has no effect on the direction of IShares Blockchain i.e., IShares Blockchain and Capital Group go up and down completely randomly.

Pair Corralation between IShares Blockchain and Capital Group

Given the investment horizon of 90 days iShares Blockchain and is expected to generate 5.21 times more return on investment than Capital Group. However, IShares Blockchain is 5.21 times more volatile than Capital Group Core. It trades about 0.07 of its potential returns per unit of risk. Capital Group Core is currently generating about 0.12 per unit of risk. If you would invest  1,387  in iShares Blockchain and on October 4, 2024 and sell it today you would earn a total of  2,032  from holding iShares Blockchain and or generate 146.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

iShares Blockchain and  vs.  Capital Group Core

iShares Blockchain and

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Blockchain and are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, IShares Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Capital Group Core

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Core are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Capital Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Blockchain and Capital Group

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

The idea behind iShares Blockchain and and Capital Group Core 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.