Correlation Between IShares Dow and RTW Venture

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

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

Diversification Opportunities for IShares Dow and RTW Venture

-0.19

Correlation Coefficient

IShares Dow  RTW Venture

Good diversification

The 3 months correlation between IShares and RTW is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dow Jones and RTW Venture Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTW Venture Fund and IShares Dow 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 Dow Jones are associated (or correlated) with RTW Venture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTW Venture Fund has no effect on the direction of IShares Dow i.e., IShares Dow and RTW Venture go up and down completely randomly.

Pair Corralation between IShares Dow and RTW Venture

Assuming the 90 days trading horizon iShares Dow Jones is expected to generate 0.65 times more return on investment than RTW Venture. However, iShares Dow Jones is 1.54 times less risky than RTW Venture. It trades about 0.02 of its potential returns per unit of risk. RTW Venture Fund is currently generating about -0.15 per unit of risk. If you would invest  7,287  in iShares Dow Jones on December 29, 2024 and sell it today you would earn a total of  46.00  from holding iShares Dow Jones or generate 0.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

iShares Dow Jones  vs.  RTW Venture Fund

iShares Dow Jones

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Dow Jones are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Dow is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

RTW Venture Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days RTW Venture Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with IShares Dow and RTW Venture

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

The idea behind iShares Dow Jones and RTW Venture Fund 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.