Correlation Between IShares Trust and IHIT

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

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

Diversification Opportunities for IShares Trust and IHIT

0.0

Correlation Coefficient

IShares Trust  IHIT

Pay attention - limited upside

The 3 months correlation between IShares and IHIT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and IHIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHIT 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 IHIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHIT has no effect on the direction of IShares Trust i.e., IShares Trust and IHIT go up and down completely randomly.

Pair Corralation between IShares Trust and IHIT

If you would invest (100.00) in IHIT on December 29, 2024 and sell it today you would earn a total of  100.00  from holding IHIT or generate -100.0% return on investment over 90 days.

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

iShares Trust  vs.  IHIT

iShares Trust

Risk-Adjusted Performance

Weak

Over the last 90 days iShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, IShares Trust is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

IHIT

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares Trust and IHIT

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

The idea behind iShares Trust and IHIT 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.