Correlation Between IShares Preferred and IShares Residential

Can any of the company-specific risk be diversified away by investing in both IShares Preferred and IShares Residential 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 Residential 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 Residential and, you can compare the effects of market volatilities on IShares Preferred and IShares Residential 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 Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Preferred and IShares Residential.

Diversification Opportunities for IShares Preferred and IShares Residential

0.65

Correlation Coefficient

IShares Preferred  IShares Residential

Poor diversification

The 3 months correlation between IShares and IShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares Preferred and and iShares Residential and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Residential and 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 Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Residential and has no effect on the direction of IShares Preferred i.e., IShares Preferred and IShares Residential go up and down completely randomly.

Pair Corralation between IShares Preferred and IShares Residential

Considering the 90-day investment horizon IShares Preferred is expected to generate 6.76 times less return on investment than IShares Residential. But when comparing it to its historical volatility, iShares Preferred and is 2.72 times less risky than IShares Residential. It trades about 0.12 of its potential returns per unit of risk. iShares Residential and is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  8,214  in iShares Residential and on December 5, 2024 and sell it today you would earn a total of  490.00  from holding iShares Residential and or generate 5.97% return on investment over 90 days.

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

iShares Preferred and  vs.  iShares Residential and

iShares Preferred

Risk-Adjusted Performance

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 Residential and

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Residential and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, IShares Residential is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Preferred and IShares Residential

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

The idea behind iShares Preferred and and iShares Residential and 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.