Correlation Between RTW Venture and IShares Dow

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

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

Diversification Opportunities for RTW Venture and IShares Dow

0.08

Correlation Coefficient

RTW Venture  IShares Dow

Significant diversification

The 3 months correlation between RTW and IShares is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding RTW Venture Fund and iShares Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Dow Jones and RTW Venture 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 RTW Venture Fund are associated (or correlated) with IShares Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Dow Jones has no effect on the direction of RTW Venture i.e., RTW Venture and IShares Dow go up and down completely randomly.

Pair Corralation between RTW Venture and IShares Dow

Assuming the 90 days trading horizon RTW Venture Fund is expected to under-perform the IShares Dow. In addition to that, RTW Venture is 1.57 times more volatile than iShares Dow Jones. It trades about -0.1 of its total potential returns per unit of risk. iShares Dow Jones is currently generating about 0.02 per unit of volatility. If you would invest  7,475  in iShares Dow Jones on September 17, 2024 and sell it today you would earn a total of  44.00  from holding iShares Dow Jones or generate 0.59% return on investment over 90 days.

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

RTW Venture Fund  vs.  iShares Dow Jones

RTW Venture Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTW Venture Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, RTW Venture is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Dow Jones

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Dow Jones are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Dow is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RTW Venture and IShares Dow

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

The idea behind RTW Venture Fund and iShares Dow Jones 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.