Correlation Between IShares 20 and Hilton Small

Can any of the company-specific risk be diversified away by investing in both IShares 20 and Hilton Small 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 20 and Hilton Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 20 Year and Hilton Small MidCap Opportunity, you can compare the effects of market volatilities on IShares 20 and Hilton Small 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 20 with a short position of Hilton Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 20 and Hilton Small.

Diversification Opportunities for IShares 20 and Hilton Small

-0.61

Correlation Coefficient

IShares 20  Hilton Small

Excellent diversification

The 3 months correlation between IShares and Hilton is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding iShares 20 Year and Hilton Small MidCap Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Small MidCap and IShares 20 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 20 Year are associated (or correlated) with Hilton Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Small MidCap has no effect on the direction of IShares 20 i.e., IShares 20 and Hilton Small go up and down completely randomly.

Pair Corralation between IShares 20 and Hilton Small

Considering the 90-day investment horizon iShares 20 Year is expected to under-perform the Hilton Small. But the etf apears to be less risky and, when comparing its historical volatility, iShares 20 Year is 1.12 times less risky than Hilton Small. The etf trades about -0.1 of its potential returns per unit of risk. The Hilton Small MidCap Opportunity is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,362  in Hilton Small MidCap Opportunity on September 5, 2024 and sell it today you would earn a total of  360.00  from holding Hilton Small MidCap Opportunity or generate 15.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

iShares 20 Year  vs.  Hilton Small MidCap Opportunit

iShares 20 Year

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares 20 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, IShares 20 is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Hilton Small MidCap

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Hilton Small MidCap Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak fundamental indicators, Hilton Small displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares 20 and Hilton Small

The main advantage of trading using opposite IShares 20 and Hilton Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 20 position performs unexpectedly, Hilton Small 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 Hilton Small will offset losses from the drop in Hilton Small's long position.

The idea behind iShares 20 Year and Hilton Small MidCap Opportunity 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.