Correlation Between Ishares Trust and BOOKING

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

By analyzing existing cross correlation between Ishares Trust and BOOKING HOLDINGS INC, you can compare the effects of market volatilities on Ishares Trust and BOOKING 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 Trust with a short position of BOOKING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Trust and BOOKING.

Diversification Opportunities for Ishares Trust and BOOKING

-0.16

Correlation Coefficient

Ishares Trust  BOOKING

Good diversification

The 3 months correlation between Ishares and BOOKING is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Trust and BOOKING HOLDINGS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOOKING HOLDINGS INC and Ishares Trust 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 Trust are associated (or correlated) with BOOKING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOOKING HOLDINGS INC has no effect on the direction of Ishares Trust i.e., Ishares Trust and BOOKING go up and down completely randomly.

Pair Corralation between Ishares Trust and BOOKING

Given the investment horizon of 90 days Ishares Trust is expected to under-perform the BOOKING. In addition to that, Ishares Trust is 3.18 times more volatile than BOOKING HOLDINGS INC. It trades about -0.07 of its total potential returns per unit of risk. BOOKING HOLDINGS INC is currently generating about -0.06 per unit of volatility. If you would invest  9,914  in BOOKING HOLDINGS INC on December 29, 2024 and sell it today you would lose (209.00) from holding BOOKING HOLDINGS INC or give up 2.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Ishares Trust   vs.  BOOKING HOLDINGS INC

Ishares Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ishares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

BOOKING HOLDINGS INC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ishares Trust and BOOKING

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

The idea behind Ishares Trust and BOOKING HOLDINGS INC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.