Correlation Between Ishares Trust and CHURCH

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

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

Diversification Opportunities for Ishares Trust and CHURCH

-0.31

Correlation Coefficient

Ishares Trust  CHURCH

Very good diversification

The 3 months correlation between Ishares and CHURCH is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Trust and CHURCH DWIGHT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHURCH DWIGHT 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 CHURCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHURCH DWIGHT INC has no effect on the direction of Ishares Trust i.e., Ishares Trust and CHURCH go up and down completely randomly.

Pair Corralation between Ishares Trust and CHURCH

Given the investment horizon of 90 days Ishares Trust is expected to generate 1.74 times more return on investment than CHURCH. However, Ishares Trust is 1.74 times more volatile than CHURCH DWIGHT INC. It trades about 0.0 of its potential returns per unit of risk. CHURCH DWIGHT INC is currently generating about -0.26 per unit of risk. If you would invest  3,354  in Ishares Trust on October 12, 2024 and sell it today you would lose (5.00) from holding Ishares Trust or give up 0.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Ishares Trust   vs.  CHURCH DWIGHT INC

Ishares Trust

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ishares Trust is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CHURCH DWIGHT INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ishares Trust and CHURCH

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

The idea behind Ishares Trust and CHURCH DWIGHT 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.