Correlation Between IShares Technology and OShares Global

Can any of the company-specific risk be diversified away by investing in both IShares Technology and OShares 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 Technology and OShares Global 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 OShares Global Internet, you can compare the effects of market volatilities on IShares Technology and OShares 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 Technology with a short position of OShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Technology and OShares Global.

Diversification Opportunities for IShares Technology and OShares Global

0.72

Correlation Coefficient

IShares Technology  OShares Global

Poor diversification

The 3 months correlation between IShares and OShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Technology ETF and OShares Global Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OShares Global Internet 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 OShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OShares Global Internet has no effect on the direction of IShares Technology i.e., IShares Technology and OShares Global go up and down completely randomly.

Pair Corralation between IShares Technology and OShares Global

Considering the 90-day investment horizon iShares Technology ETF is expected to under-perform the OShares Global. In addition to that, IShares Technology is 1.02 times more volatile than OShares Global Internet. It trades about -0.12 of its total potential returns per unit of risk. OShares Global Internet is currently generating about -0.04 per unit of volatility. If you would invest  4,623  in OShares Global Internet on December 29, 2024 and sell it today you would lose (221.00) from holding OShares Global Internet or give up 4.78% of portfolio value over 90 days.

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

iShares Technology ETF  vs.  OShares Global Internet

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 inconsistent performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

OShares Global Internet

Risk-Adjusted Performance

Very Weak

Over the last 90 days OShares Global Internet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, OShares Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Technology and OShares Global

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

The idea behind iShares Technology ETF and OShares Global Internet 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.