Correlation Between IShares Flexible and IShares Gold

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

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

Diversification Opportunities for IShares Flexible and IShares Gold

0.17

Correlation Coefficient

IShares Flexible  IShares Gold

Average diversification

The 3 months correlation between IShares and IShares is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding iShares Flexible Monthly and iShares Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Gold Bullion and IShares Flexible 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 Flexible Monthly are associated (or correlated) with IShares Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Gold Bullion has no effect on the direction of IShares Flexible i.e., IShares Flexible and IShares Gold go up and down completely randomly.

Pair Corralation between IShares Flexible and IShares Gold

Assuming the 90 days trading horizon iShares Flexible Monthly is expected to under-perform the IShares Gold. But the etf apears to be less risky and, when comparing its historical volatility, iShares Flexible Monthly is 5.0 times less risky than IShares Gold. The etf trades about -0.02 of its potential returns per unit of risk. The iShares Gold Bullion is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,289  in iShares Gold Bullion on October 7, 2024 and sell it today you would earn a total of  926.00  from holding iShares Gold Bullion or generate 40.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	25.4%
Values	Daily Returns

iShares Flexible Monthly  vs.  iShares Gold Bullion

iShares Flexible Monthly

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Flexible Monthly has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares Flexible is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares Gold Bullion

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Gold Bullion are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Gold is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Flexible and IShares Gold

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

The idea behind iShares Flexible Monthly and iShares Gold Bullion 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.