Correlation Between IShares Genomics and IShares Technology

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

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

Diversification Opportunities for IShares Genomics and IShares Technology

-0.1

Correlation Coefficient

IShares Genomics  IShares Technology

Good diversification

The 3 months correlation between IShares and IShares is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding iShares Genomics Immunology and iShares Technology ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Technology ETF and IShares Genomics 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 Genomics Immunology are associated (or correlated) with IShares Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Technology ETF has no effect on the direction of IShares Genomics i.e., IShares Genomics and IShares Technology go up and down completely randomly.

Pair Corralation between IShares Genomics and IShares Technology

Given the investment horizon of 90 days iShares Genomics Immunology is expected to under-perform the IShares Technology. In addition to that, IShares Genomics is 1.14 times more volatile than iShares Technology ETF. It trades about -0.01 of its total potential returns per unit of risk. iShares Technology ETF is currently generating about 0.12 per unit of volatility. If you would invest  7,784  in iShares Technology ETF on October 4, 2024 and sell it today you would earn a total of  8,171  from holding iShares Technology ETF or generate 104.97% return on investment over 90 days.

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

iShares Genomics Immunology  vs.  iShares Technology ETF

iShares Genomics Imm

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares Technology ETF

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Technology ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Technology is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Genomics and IShares Technology

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

The idea behind iShares Genomics Immunology and iShares Technology ETF 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..