Correlation Between IShares Trust and IShares Ibovespa
Can any of the company-specific risk be diversified away by investing in both IShares Trust and IShares Ibovespa 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 Trust and IShares Ibovespa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and iShares Ibovespa Index, you can compare the effects of market volatilities on IShares Trust and IShares Ibovespa 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 Trust with a short position of IShares Ibovespa. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and IShares Ibovespa.
Diversification Opportunities for IShares Trust and IShares Ibovespa
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and IShares is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and iShares Ibovespa Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Ibovespa Index and IShares Trust 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 Trust are associated (or correlated) with IShares Ibovespa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Ibovespa Index has no effect on the direction of IShares Trust i.e., IShares Trust and IShares Ibovespa go up and down completely randomly.
Pair Corralation between IShares Trust and IShares Ibovespa
Assuming the 90 days trading horizon iShares Trust is expected to generate 1.84 times more return on investment than IShares Ibovespa. However, IShares Trust is 1.84 times more volatile than iShares Ibovespa Index. It trades about 0.11 of its potential returns per unit of risk. iShares Ibovespa Index is currently generating about 0.0 per unit of risk. If you would invest 7,008 in iShares Trust on August 31, 2024 and sell it today you would earn a total of 3,094 from holding iShares Trust or generate 44.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.58% |
| Values | Daily Returns |
iShares Trust vs. iShares Ibovespa Index
Performance |
| Timeline |
| iShares Trust |
| iShares Ibovespa Index |
IShares Trust and IShares Ibovespa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and IShares Ibovespa
The main advantage of trading using opposite IShares Trust and IShares Ibovespa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, IShares Ibovespa 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 Ibovespa will offset losses from the drop in IShares Ibovespa's long position.| IShares Trust vs. Energisa SA | IShares Trust vs. BTG Pactual Logstica | IShares Trust vs. Plano Plano Desenvolvimento | IShares Trust vs. Companhia Habitasul de |
| IShares Ibovespa vs. iShares BMFBovespa Small | IShares Ibovespa vs. iShares Trust | IShares Ibovespa vs. iShares Trust | IShares Ibovespa vs. iShares Trust |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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