Correlation Between Legal General and IShares II
Can any of the company-specific risk be diversified away by investing in both Legal General and IShares II 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 Legal General and IShares II into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legal General UCITS and iShares II Public, you can compare the effects of market volatilities on Legal General and IShares II 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 Legal General with a short position of IShares II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legal General and IShares II.
Diversification Opportunities for Legal General and IShares II
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legal and IShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Legal General UCITS and iShares II Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares II Public and Legal General 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 Legal General UCITS are associated (or correlated) with IShares II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares II Public has no effect on the direction of Legal General i.e., Legal General and IShares II go up and down completely randomly.
Pair Corralation between Legal General and IShares II
Assuming the 90 days trading horizon Legal General is expected to generate 7.85 times less return on investment than IShares II. In addition to that, Legal General is 1.72 times more volatile than iShares II Public. It trades about 0.03 of its total potential returns per unit of risk. iShares II Public is currently generating about 0.35 per unit of volatility. If you would invest 5,279 in iShares II Public on November 28, 2024 and sell it today you would earn a total of 336.00 from holding iShares II Public or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legal General UCITS vs. iShares II Public
Performance |
| Timeline |
| Legal General UCITS |
| iShares II Public |
Legal General and IShares II Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legal General and IShares II
The main advantage of trading using opposite Legal General and IShares II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legal General position performs unexpectedly, IShares II 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 II will offset losses from the drop in IShares II's long position.| Legal General vs. Legal General UCITS | Legal General vs. LG Russell 2000 | Legal General vs. iShares MSCI EM | Legal General vs. VanEck Multi Asset Growth |
| IShares II vs. iShares SP 500 | IShares II vs. iShares Euro Dividend | IShares II vs. iShares Core MSCI | IShares II vs. iShares AEX UCITS |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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