Correlation Between Ishares Trust and 532457BU1

Can any of the company-specific risk be diversified away by investing in both Ishares Trust and 532457BU1 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 532457BU1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ishares Trust and ELI LILLY AND, you can compare the effects of market volatilities on Ishares Trust and 532457BU1 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 532457BU1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Trust and 532457BU1.

Diversification Opportunities for Ishares Trust and 532457BU1

-0.57

Correlation Coefficient

Ishares Trust  532457BU1

Excellent diversification

The 3 months correlation between Ishares and 532457BU1 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Trust and ELI LILLY AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELI LILLY AND 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 532457BU1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELI LILLY AND has no effect on the direction of Ishares Trust i.e., Ishares Trust and 532457BU1 go up and down completely randomly.

Pair Corralation between Ishares Trust and 532457BU1

Given the investment horizon of 90 days Ishares Trust is expected to generate 104.63 times less return on investment than 532457BU1. But when comparing it to its historical volatility, Ishares Trust is 83.83 times less risky than 532457BU1. It trades about 0.08 of its potential returns per unit of risk. ELI LILLY AND is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  9,045  in ELI LILLY AND on September 24, 2024 and sell it today you would lose (879.00) from holding ELI LILLY AND or give up 9.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.1%
Values	Daily Returns

Ishares Trust   vs.  ELI LILLY AND

Ishares Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Ishares Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ELI LILLY AND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ELI LILLY AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ELI LILLY AND investors.

Pair Trading with Ishares Trust and 532457BU1

The main advantage of trading using opposite Ishares Trust and 532457BU1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Trust position performs unexpectedly, 532457BU1 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 532457BU1 will offset losses from the drop in 532457BU1's long position.

The idea behind Ishares Trust and ELI LILLY AND 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.