Correlation Between IShares Technology and Xtrackers Artificial

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

Diversification Opportunities for IShares Technology and Xtrackers Artificial

0.98

Correlation Coefficient

IShares Technology  Xtrackers Artificial

Almost no diversification

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

Pair Corralation between IShares Technology and Xtrackers Artificial

Considering the 90-day investment horizon IShares Technology is expected to generate 1.36 times less return on investment than Xtrackers Artificial. In addition to that, IShares Technology is 1.28 times more volatile than Xtrackers Artificial Intelligence. It trades about 0.09 of its total potential returns per unit of risk. Xtrackers Artificial Intelligence is currently generating about 0.15 per unit of volatility. If you would invest  3,087  in Xtrackers Artificial Intelligence on August 30, 2024 and sell it today you would earn a total of  309.00  from holding Xtrackers Artificial Intelligence or generate 10.01% return on investment over 90 days.

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

iShares Technology ETF  vs.  Xtrackers Artificial Intellige

iShares Technology ETF

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Technology ETF are ranked lower than 6 (%) 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 December 2024.

Xtrackers Artificial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Artificial Intelligence are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, Xtrackers Artificial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with IShares Technology and Xtrackers Artificial

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

The idea behind iShares Technology ETF and Xtrackers Artificial Intelligence 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.