Correlation Between IShares Global and IShares Global

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

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

Diversification Opportunities for IShares Global and IShares Global

0.6

Correlation Coefficient

IShares Global  IShares Global

Poor diversification

The 3 months correlation between IShares and IShares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Utilities and iShares Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Infra and IShares Global 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 Global Utilities are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Infra has no effect on the direction of IShares Global i.e., IShares Global and IShares Global go up and down completely randomly.

Pair Corralation between IShares Global and IShares Global

Considering the 90-day investment horizon iShares Global Utilities is expected to under-perform the IShares Global. In addition to that, IShares Global is 1.22 times more volatile than iShares Global Infrastructure. It trades about -0.08 of its total potential returns per unit of risk. iShares Global Infrastructure is currently generating about -0.01 per unit of volatility. If you would invest  5,378  in iShares Global Infrastructure on September 16, 2024 and sell it today you would lose (27.00) from holding iShares Global Infrastructure or give up 0.5% of portfolio value over 90 days.

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

iShares Global Utilities  vs.  iShares Global Infrastructure

iShares Global Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IShares Global is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

iShares Global Infra

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Global and IShares Global

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

The idea behind iShares Global Utilities and iShares Global Infrastructure 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.