Correlation Between IShares Global and Themes Transatlantic
Can any of the company-specific risk be diversified away by investing in both IShares Global and Themes Transatlantic 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 Global and Themes Transatlantic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Industrials and Themes Transatlantic Defense, you can compare the effects of market volatilities on IShares Global and Themes Transatlantic 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 Global with a short position of Themes Transatlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Themes Transatlantic.
Diversification Opportunities for IShares Global and Themes Transatlantic
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Themes is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Industrials and Themes Transatlantic Defense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Transatlantic and IShares Global 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 Global Industrials are associated (or correlated) with Themes Transatlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Transatlantic has no effect on the direction of IShares Global i.e., IShares Global and Themes Transatlantic go up and down completely randomly.
Pair Corralation between IShares Global and Themes Transatlantic
Considering the 90-day investment horizon IShares Global is expected to generate 1.37 times less return on investment than Themes Transatlantic. But when comparing it to its historical volatility, iShares Global Industrials is 1.08 times less risky than Themes Transatlantic. It trades about 0.26 of its potential returns per unit of risk. Themes Transatlantic Defense is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,531 in Themes Transatlantic Defense on November 3, 2024 and sell it today you would earn a total of 172.00 from holding Themes Transatlantic Defense or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Industrials vs. Themes Transatlantic Defense
Performance |
| Timeline |
| iShares Global Indus |
| Themes Transatlantic |
IShares Global and Themes Transatlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and Themes Transatlantic
The main advantage of trading using opposite IShares Global and Themes Transatlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, Themes Transatlantic 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 Themes Transatlantic will offset losses from the drop in Themes Transatlantic's long position.| IShares Global vs. iShares Global Consumer | IShares Global vs. iShares Global Utilities | IShares Global vs. iShares Global Consumer | IShares Global vs. iShares Global Materials |
| Themes Transatlantic vs. Ultimus Managers Trust | Themes Transatlantic vs. American Beacon Select | Themes Transatlantic vs. First Trust Indxx | Themes Transatlantic vs. Direxion Daily SP |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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