Correlation Between IShares Trust and Main Thematic

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

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

Diversification Opportunities for IShares Trust and Main Thematic

-0.54

Correlation Coefficient

IShares Trust  Main Thematic

Excellent diversification

The 3 months correlation between IShares and Main is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Main Thematic Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Thematic Innovation and IShares Trust 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 Trust are associated (or correlated) with Main Thematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Thematic Innovation has no effect on the direction of IShares Trust i.e., IShares Trust and Main Thematic go up and down completely randomly.

Pair Corralation between IShares Trust and Main Thematic

Given the investment horizon of 90 days IShares Trust is expected to generate 31.28 times less return on investment than Main Thematic. But when comparing it to its historical volatility, iShares Trust is 6.39 times less risky than Main Thematic. It trades about 0.02 of its potential returns per unit of risk. Main Thematic Innovation is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,695  in Main Thematic Innovation on September 21, 2024 and sell it today you would earn a total of  385.00  from holding Main Thematic Innovation or generate 22.71% return on investment over 90 days.

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

iShares Trust   vs.  Main Thematic Innovation

iShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, IShares Trust is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Main Thematic Innovation

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Main Thematic Innovation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Main Thematic unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Trust and Main Thematic

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

The idea behind iShares Trust and Main Thematic Innovation 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.