Correlation Between IREIT MarketVector and IShares Latin

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

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

Diversification Opportunities for IREIT MarketVector and IShares Latin

0.35

Correlation Coefficient

IREIT MarketVector  IShares Latin

Weak diversification

The 3 months correlation between IREIT and IShares is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding iREIT MarketVector and iShares Latin America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Latin America and IREIT MarketVector 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 iREIT MarketVector are associated (or correlated) with IShares Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Latin America has no effect on the direction of IREIT MarketVector i.e., IREIT MarketVector and IShares Latin go up and down completely randomly.

Pair Corralation between IREIT MarketVector and IShares Latin

Given the investment horizon of 90 days IREIT MarketVector is expected to generate 112.63 times less return on investment than IShares Latin. But when comparing it to its historical volatility, iREIT MarketVector is 1.21 times less risky than IShares Latin. It trades about 0.0 of its potential returns per unit of risk. iShares Latin America is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,096  in iShares Latin America on December 28, 2024 and sell it today you would earn a total of  281.00  from holding iShares Latin America or generate 13.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

iREIT MarketVector  vs.  iShares Latin America

iREIT MarketVector

Risk-Adjusted Performance

Very Weak

Over the last 90 days iREIT MarketVector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, IREIT MarketVector is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

iShares Latin America

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Latin America are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal essential indicators, IShares Latin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IREIT MarketVector and IShares Latin

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

The idea behind iREIT MarketVector and iShares Latin America 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.