Correlation Between IShares Preferred and IShares International

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

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

Diversification Opportunities for IShares Preferred and IShares International

0.83

Correlation Coefficient

IShares Preferred  IShares International

Very poor diversification

The 3 months correlation between IShares and IShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Preferred and and iShares International Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International and IShares Preferred 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 Preferred and are associated (or correlated) with IShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares International has no effect on the direction of IShares Preferred i.e., IShares Preferred and IShares International go up and down completely randomly.

Pair Corralation between IShares Preferred and IShares International

Considering the 90-day investment horizon iShares Preferred and is expected to under-perform the IShares International. But the etf apears to be less risky and, when comparing its historical volatility, iShares Preferred and is 1.06 times less risky than IShares International. The etf trades about -0.3 of its potential returns per unit of risk. The iShares International Select is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest  2,828  in iShares International Select on October 12, 2024 and sell it today you would lose (95.00) from holding iShares International Select or give up 3.36% of portfolio value over 90 days.

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

iShares Preferred and  vs.  iShares International Select

iShares Preferred

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares International Select has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with IShares Preferred and IShares International

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

The idea behind iShares Preferred and and iShares International Select 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.