Correlation Between Roundhill Ball and IShares Technology

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

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

Diversification Opportunities for Roundhill Ball and IShares Technology

0.75

Correlation Coefficient

Roundhill Ball  IShares Technology

Poor diversification

The 3 months correlation between Roundhill and IShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Ball Metaverse and iShares Technology ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Technology ETF and Roundhill Ball 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 Roundhill Ball Metaverse are associated (or correlated) with IShares Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Technology ETF has no effect on the direction of Roundhill Ball i.e., Roundhill Ball and IShares Technology go up and down completely randomly.

Pair Corralation between Roundhill Ball and IShares Technology

Given the investment horizon of 90 days Roundhill Ball is expected to generate 1.19 times less return on investment than IShares Technology. In addition to that, Roundhill Ball is 1.06 times more volatile than iShares Technology ETF. It trades about 0.09 of its total potential returns per unit of risk. iShares Technology ETF is currently generating about 0.12 per unit of volatility. If you would invest  7,784  in iShares Technology ETF on October 4, 2024 and sell it today you would earn a total of  8,171  from holding iShares Technology ETF or generate 104.97% return on investment over 90 days.

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

Roundhill Ball Metaverse  vs.  iShares Technology ETF

Roundhill Ball Metaverse

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roundhill Ball Metaverse are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Roundhill Ball may actually be approaching a critical reversion point that can send shares even higher in February 2025.

iShares Technology ETF

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Technology ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Technology is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Roundhill Ball and IShares Technology

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

The idea behind Roundhill Ball Metaverse and iShares Technology ETF 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.