Correlation Between IShares California and IShares New
Can any of the company-specific risk be diversified away by investing in both IShares California and IShares New 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 California and IShares New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares California Muni and iShares New York, you can compare the effects of market volatilities on IShares California and IShares New 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 California with a short position of IShares New. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares California and IShares New.
Diversification Opportunities for IShares California and IShares New
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares California Muni and iShares New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares New York and IShares California 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 California Muni are associated (or correlated) with IShares New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares New York has no effect on the direction of IShares California i.e., IShares California and IShares New go up and down completely randomly.
Pair Corralation between IShares California and IShares New
Considering the 90-day investment horizon IShares California is expected to generate 1.01 times less return on investment than IShares New. In addition to that, IShares California is 1.03 times more volatile than iShares New York. It trades about 0.04 of its total potential returns per unit of risk. iShares New York is currently generating about 0.04 per unit of volatility. If you would invest 5,111 in iShares New York on October 24, 2024 and sell it today you would earn a total of 214.00 from holding iShares New York or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares California Muni vs. iShares New York
Performance |
| Timeline |
| iShares California Muni |
| iShares New York |
IShares California and IShares New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares California and IShares New
The main advantage of trading using opposite IShares California and IShares New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares California position performs unexpectedly, IShares New 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 New will offset losses from the drop in IShares New's long position.| IShares California vs. iShares New York | IShares California vs. Invesco California AMT Free | IShares California vs. iShares Intermediate GovernmentCredit | IShares California vs. iShares Short Term National |
| IShares New vs. iShares California Muni | IShares New vs. iShares Intermediate GovernmentCredit | IShares New vs. Invesco New York | IShares New vs. iShares Agency Bond |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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