Correlation Between IShares Real and IREIT MarketVector

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

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

Diversification Opportunities for IShares Real and IREIT MarketVector

0.98

Correlation Coefficient

IShares Real  IREIT MarketVector

Almost no diversification

The 3 months correlation between IShares and IREIT is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Real Estate and iREIT MarketVector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iREIT MarketVector and IShares Real 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 Real Estate are associated (or correlated) with IREIT MarketVector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iREIT MarketVector has no effect on the direction of IShares Real i.e., IShares Real and IREIT MarketVector go up and down completely randomly.

Pair Corralation between IShares Real and IREIT MarketVector

Considering the 90-day investment horizon iShares Real Estate is expected to generate 1.13 times more return on investment than IREIT MarketVector. However, IShares Real is 1.13 times more volatile than iREIT MarketVector. It trades about 0.06 of its potential returns per unit of risk. iREIT MarketVector is currently generating about 0.01 per unit of risk. If you would invest  9,279  in iShares Real Estate on October 22, 2024 and sell it today you would earn a total of  107.00  from holding iShares Real Estate or generate 1.15% return on investment over 90 days.

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

iShares Real Estate  vs.  iREIT MarketVector

iShares Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IShares Real is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

iREIT MarketVector

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with IShares Real and IREIT MarketVector

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

The idea behind iShares Real Estate and iREIT MarketVector 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.