Correlation Between IShares Global and IShares Global

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

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

Diversification Opportunities for IShares Global and IShares Global

0.79

Correlation Coefficient

IShares Global  IShares Global

Poor diversification

The 3 months correlation between IShares and IShares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Comm and iShares Global Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Financials and IShares Global 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 Global Comm are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Financials has no effect on the direction of IShares Global i.e., IShares Global and IShares Global go up and down completely randomly.

Pair Corralation between IShares Global and IShares Global

Considering the 90-day investment horizon iShares Global Comm is expected to generate 1.11 times more return on investment than IShares Global. However, IShares Global is 1.11 times more volatile than iShares Global Financials. It trades about 0.1 of its potential returns per unit of risk. iShares Global Financials is currently generating about 0.09 per unit of risk. If you would invest  9,733  in iShares Global Comm on December 1, 2024 and sell it today you would earn a total of  530.00  from holding iShares Global Comm or generate 5.45% return on investment over 90 days.

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

iShares Global Comm  vs.  iShares Global Financials

iShares Global Comm

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Comm are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Global is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

iShares Global Financials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Financials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IShares Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Global and IShares Global

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

The idea behind iShares Global Comm and iShares Global Financials 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.