Correlation Between T Rex and IShares Real

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

By analyzing existing cross correlation between T Rex 2X Long and iShares Real Estate, you can compare the effects of market volatilities on T Rex and IShares Real 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 T Rex with a short position of IShares Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and IShares Real.

Diversification Opportunities for T Rex and IShares Real

-0.56

Correlation Coefficient

T Rex  IShares Real

Excellent diversification

The 3 months correlation between NVDX and IShares is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and iShares Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Real Estate and T Rex 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 T Rex 2X Long are associated (or correlated) with IShares Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Real Estate has no effect on the direction of T Rex i.e., T Rex and IShares Real go up and down completely randomly.

Pair Corralation between T Rex and IShares Real

Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the IShares Real. In addition to that, T Rex is 6.06 times more volatile than iShares Real Estate. It trades about -0.08 of its total potential returns per unit of risk. iShares Real Estate is currently generating about -0.06 per unit of volatility. If you would invest  9,923  in iShares Real Estate on September 12, 2024 and sell it today you would lose (102.00) from holding iShares Real Estate or give up 1.03% of portfolio value over 90 days.

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

T Rex 2X Long  vs.  iShares Real Estate

T Rex 2X

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T Rex 2X Long are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, T Rex showed solid returns over the last few months and may actually be approaching a breakup point.

iShares Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IShares Real is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with T Rex and IShares Real

The main advantage of trading using opposite T Rex and IShares Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, IShares Real 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 Real will offset losses from the drop in IShares Real's long position.

The idea behind T Rex 2X Long and iShares Real Estate 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.