Correlation Between IShares Technology and 02005NBJ8

Can any of the company-specific risk be diversified away by investing in both IShares Technology and 02005NBJ8 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 02005NBJ8 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 ALLY FINANCIAL INC, you can compare the effects of market volatilities on IShares Technology and 02005NBJ8 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 02005NBJ8. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Technology and 02005NBJ8.

Diversification Opportunities for IShares Technology and 02005NBJ8

-0.47

Correlation Coefficient

IShares Technology  02005NBJ8

Very good diversification

The 3 months correlation between IShares and 02005NBJ8 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Technology ETF and ALLY FINANCIAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLY FINANCIAL INC 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 02005NBJ8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLY FINANCIAL INC has no effect on the direction of IShares Technology i.e., IShares Technology and 02005NBJ8 go up and down completely randomly.

Pair Corralation between IShares Technology and 02005NBJ8

Considering the 90-day investment horizon iShares Technology ETF is expected to generate 5.24 times more return on investment than 02005NBJ8. However, IShares Technology is 5.24 times more volatile than ALLY FINANCIAL INC. It trades about 0.08 of its potential returns per unit of risk. ALLY FINANCIAL INC is currently generating about -0.13 per unit of risk. If you would invest  15,899  in iShares Technology ETF on September 23, 2024 and sell it today you would earn a total of  303.00  from holding iShares Technology ETF or generate 1.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

iShares Technology ETF  vs.  ALLY FINANCIAL INC

iShares Technology ETF

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Technology ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, IShares Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ALLY FINANCIAL INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLY FINANCIAL INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 02005NBJ8 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Technology and 02005NBJ8

The main advantage of trading using opposite IShares Technology and 02005NBJ8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Technology position performs unexpectedly, 02005NBJ8 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 02005NBJ8 will offset losses from the drop in 02005NBJ8's long position.

The idea behind iShares Technology ETF and ALLY FINANCIAL INC 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.