Correlation Between IShares Consumer and Strategy Shares

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

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

Diversification Opportunities for IShares Consumer and Strategy Shares

0.33

Correlation Coefficient

IShares Consumer  Strategy Shares

Weak diversification

The 3 months correlation between IShares and Strategy is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding iShares Consumer Discretionary and Strategy Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares and IShares Consumer 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 Consumer Discretionary are associated (or correlated) with Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares has no effect on the direction of IShares Consumer i.e., IShares Consumer and Strategy Shares go up and down completely randomly.

Pair Corralation between IShares Consumer and Strategy Shares

Considering the 90-day investment horizon iShares Consumer Discretionary is expected to generate 2.34 times more return on investment than Strategy Shares. However, IShares Consumer is 2.34 times more volatile than Strategy Shares . It trades about 0.13 of its potential returns per unit of risk. Strategy Shares is currently generating about 0.02 per unit of risk. If you would invest  9,417  in iShares Consumer Discretionary on November 19, 2024 and sell it today you would earn a total of  681.00  from holding iShares Consumer Discretionary or generate 7.23% return on investment over 90 days.

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

iShares Consumer Discretionary  vs.  Strategy Shares

iShares Consumer Dis

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Consumer Discretionary are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, IShares Consumer may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Strategy Shares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Strategy Shares is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares Consumer and Strategy Shares

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

The idea behind iShares Consumer Discretionary and Strategy Shares 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.