Correlation Between IShares Technology and AOT Growth

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

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

Diversification Opportunities for IShares Technology and AOT Growth

0.9

Correlation Coefficient

IShares Technology  AOT Growth

Almost no diversification

The 3 months correlation between IShares and AOT is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Technology ETF and AOT Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOT Growth and IShares Technology 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 Technology ETF are associated (or correlated) with AOT Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOT Growth has no effect on the direction of IShares Technology i.e., IShares Technology and AOT Growth go up and down completely randomly.

Pair Corralation between IShares Technology and AOT Growth

Considering the 90-day investment horizon iShares Technology ETF is expected to generate 0.9 times more return on investment than AOT Growth. However, iShares Technology ETF is 1.11 times less risky than AOT Growth. It trades about -0.08 of its potential returns per unit of risk. AOT Growth and is currently generating about -0.08 per unit of risk. If you would invest  16,092  in iShares Technology ETF on December 28, 2024 and sell it today you would lose (1,463) from holding iShares Technology ETF or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

iShares Technology ETF  vs.  AOT Growth and

iShares Technology ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Technology ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

AOT Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days AOT Growth and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with IShares Technology and AOT Growth

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

The idea behind iShares Technology ETF and AOT Growth and 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.