Correlation Between IShares Focused and Acquirers
Can any of the company-specific risk be diversified away by investing in both IShares Focused and Acquirers 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 Focused and Acquirers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Focused Value and The Acquirers, you can compare the effects of market volatilities on IShares Focused and Acquirers 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 Focused with a short position of Acquirers. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Focused and Acquirers.
Diversification Opportunities for IShares Focused and Acquirers
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Acquirers is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Focused Value and The Acquirers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acquirers and IShares Focused 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 Focused Value are associated (or correlated) with Acquirers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acquirers has no effect on the direction of IShares Focused i.e., IShares Focused and Acquirers go up and down completely randomly.
Pair Corralation between IShares Focused and Acquirers
Given the investment horizon of 90 days iShares Focused Value is expected to generate 0.89 times more return on investment than Acquirers. However, iShares Focused Value is 1.12 times less risky than Acquirers. It trades about 0.17 of its potential returns per unit of risk. The Acquirers is currently generating about 0.08 per unit of risk. If you would invest 6,005 in iShares Focused Value on September 1, 2024 and sell it today you would earn a total of 1,601 from holding iShares Focused Value or generate 26.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Focused Value vs. The Acquirers
Performance |
| Timeline |
| iShares Focused Value |
| Acquirers |
IShares Focused and Acquirers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Focused and Acquirers
The main advantage of trading using opposite IShares Focused and Acquirers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Focused position performs unexpectedly, Acquirers 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 Acquirers will offset losses from the drop in Acquirers' long position.| IShares Focused vs. Vanguard Mid Cap Value | IShares Focused vs. SPDR SP Dividend | IShares Focused vs. Pacer Cash Cows | IShares Focused vs. iShares SP Mid Cap |
| Acquirers vs. Roundhill Acquirers Deep | Acquirers vs. Alpha Architect Quantitative | Acquirers vs. Vesper Large Cap | Acquirers vs. Cambria Trinity ETF |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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