Correlation Between IShares Trust and Southern Copper
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Southern Copper 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 Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Southern Copper, you can compare the effects of market volatilities on IShares Trust and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Southern Copper.
Diversification Opportunities for IShares Trust and Southern Copper
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IShares and Southern is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of IShares Trust i.e., IShares Trust and Southern Copper go up and down completely randomly.
Pair Corralation between IShares Trust and Southern Copper
Assuming the 90 days trading horizon iShares Trust is expected to generate 0.66 times more return on investment than Southern Copper. However, iShares Trust is 1.52 times less risky than Southern Copper. It trades about 0.15 of its potential returns per unit of risk. Southern Copper is currently generating about 0.03 per unit of risk. If you would invest 154,156 in iShares Trust on August 31, 2024 and sell it today you would earn a total of 35,444 from holding iShares Trust or generate 22.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.83% |
| Values | Daily Returns |
iShares Trust vs. Southern Copper
Performance |
| Timeline |
| iShares Trust |
| Southern Copper |
IShares Trust and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Southern Copper
The main advantage of trading using opposite IShares Trust and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| IShares Trust vs. Promotora y Operadora | IShares Trust vs. UnitedHealth Group Incorporated | IShares Trust vs. Qulitas Controladora SAB | IShares Trust vs. Hoteles City Express |
| Southern Copper vs. Deutsche Bank Aktiengesellschaft | Southern Copper vs. FIBRA Storage | Southern Copper vs. McEwen Mining | Southern Copper vs. Ross Stores |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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