Correlation Between IShares Interest and IShares Intl
Can any of the company-specific risk be diversified away by investing in both IShares Interest and IShares Intl 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 Interest and IShares Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Interest Rate and iShares Intl High, you can compare the effects of market volatilities on IShares Interest and IShares Intl 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 Interest with a short position of IShares Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Interest and IShares Intl.
Diversification Opportunities for IShares Interest and IShares Intl
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding iShares Interest Rate and iShares Intl High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Intl High and IShares Interest 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 Interest Rate are associated (or correlated) with IShares Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Intl High has no effect on the direction of IShares Interest i.e., IShares Interest and IShares Intl go up and down completely randomly.
Pair Corralation between IShares Interest and IShares Intl
Given the investment horizon of 90 days iShares Interest Rate is expected to generate 0.74 times more return on investment than IShares Intl. However, iShares Interest Rate is 1.35 times less risky than IShares Intl. It trades about 0.37 of its potential returns per unit of risk. iShares Intl High is currently generating about 0.11 per unit of risk. If you would invest 8,572 in iShares Interest Rate on September 1, 2024 and sell it today you would earn a total of 134.00 from holding iShares Interest Rate or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Interest Rate vs. iShares Intl High
Performance |
| Timeline |
| iShares Interest Rate |
| iShares Intl High |
IShares Interest and IShares Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Interest and IShares Intl
The main advantage of trading using opposite IShares Interest and IShares Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Interest position performs unexpectedly, IShares Intl 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 IShares Intl will offset losses from the drop in IShares Intl's long position.The idea behind iShares Interest Rate and iShares Intl High pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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