Correlation Between IShares Trust and International Business
Can any of the company-specific risk be diversified away by investing in both IShares Trust and International Business 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 International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and International Business Machines, you can compare the effects of market volatilities on IShares Trust and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and International Business.
Diversification Opportunities for IShares Trust and International Business
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and International is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of IShares Trust i.e., IShares Trust and International Business go up and down completely randomly.
Pair Corralation between IShares Trust and International Business
Assuming the 90 days trading horizon IShares Trust is expected to generate 20.31 times less return on investment than International Business. In addition to that, IShares Trust is 1.15 times more volatile than International Business Machines. It trades about 0.01 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.12 per unit of volatility. If you would invest 212,773 in International Business Machines on November 27, 2024 and sell it today you would earn a total of 320,127 from holding International Business Machines or generate 150.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. International Business Machine
Performance |
| Timeline |
| iShares Trust |
| International Business |
IShares Trust and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and International Business
The main advantage of trading using opposite IShares Trust and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
| International Business vs. Air Transport Services | International Business vs. Grupo Hotelero Santa | International Business vs. Grupo Industrial Saltillo | International Business vs. Monster Beverage Corp |
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.
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