Correlation Between IShares Trust and Cable One
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Cable One 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 Cable One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Cable One, you can compare the effects of market volatilities on IShares Trust and Cable One 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 Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Cable One.
Diversification Opportunities for IShares Trust and Cable One
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Cable is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One 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 Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of IShares Trust i.e., IShares Trust and Cable One go up and down completely randomly.
Pair Corralation between IShares Trust and Cable One
Assuming the 90 days trading horizon IShares Trust is expected to generate 1.56 times less return on investment than Cable One. But when comparing it to its historical volatility, iShares Trust is 1.85 times less risky than Cable One. It trades about 0.53 of its potential returns per unit of risk. Cable One is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 986.00 in Cable One on August 27, 2024 and sell it today you would earn a total of 187.00 from holding Cable One or generate 18.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Cable One
Performance |
| Timeline |
| iShares Trust |
| Cable One |
IShares Trust and Cable One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Cable One
The main advantage of trading using opposite IShares Trust and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Cable One 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 Cable One will offset losses from the drop in Cable One's long position.| IShares Trust vs. iShares BMFBovespa Small | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares iShares |
| Cable One vs. Extra Space Storage | Cable One vs. Ross Stores | Cable One vs. Delta Air Lines | Cable One vs. Unifique Telecomunicaes SA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |