Correlation Between IShares Trust and Research Affiliates
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Research Affiliates 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 Research Affiliates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Research Affiliates Deletions, you can compare the effects of market volatilities on IShares Trust and Research Affiliates 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 Research Affiliates. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Research Affiliates.
Diversification Opportunities for IShares Trust and Research Affiliates
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and Research is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Research Affiliates Deletions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Research Affiliates 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 Research Affiliates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Research Affiliates has no effect on the direction of IShares Trust i.e., IShares Trust and Research Affiliates go up and down completely randomly.
Pair Corralation between IShares Trust and Research Affiliates
Given the investment horizon of 90 days IShares Trust is expected to generate 1.72 times less return on investment than Research Affiliates. But when comparing it to its historical volatility, iShares Trust is 1.08 times less risky than Research Affiliates. It trades about 0.11 of its potential returns per unit of risk. Research Affiliates Deletions is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,477 in Research Affiliates Deletions on August 29, 2024 and sell it today you would earn a total of 291.00 from holding Research Affiliates Deletions or generate 11.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 12.42% |
| Values | Daily Returns |
iShares Trust vs. Research Affiliates Deletions
Performance |
| Timeline |
| iShares Trust |
| Research Affiliates |
IShares Trust and Research Affiliates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Research Affiliates
The main advantage of trading using opposite IShares Trust and Research Affiliates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Research Affiliates 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 Research Affiliates will offset losses from the drop in Research Affiliates' long position.| IShares Trust vs. iShares MSCI USA | IShares Trust vs. iShares MSCI USA | IShares Trust vs. iShares MSCI USA | IShares Trust vs. iShares Expanded Tech Software |
| Research Affiliates vs. FT Vest Equity | Research Affiliates vs. Northern Lights | Research Affiliates vs. Dimensional International High | Research Affiliates vs. First Trust Exchange Traded |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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