Correlation Between IShares Insurance and IShares Oil
Can any of the company-specific risk be diversified away by investing in both IShares Insurance and IShares Oil 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 Insurance and IShares Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Insurance ETF and iShares Oil Equipment, you can compare the effects of market volatilities on IShares Insurance and IShares Oil 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 Insurance with a short position of IShares Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Insurance and IShares Oil.
Diversification Opportunities for IShares Insurance and IShares Oil
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding iShares Insurance ETF and iShares Oil Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Oil Equipment and IShares Insurance 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 Insurance ETF are associated (or correlated) with IShares Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Oil Equipment has no effect on the direction of IShares Insurance i.e., IShares Insurance and IShares Oil go up and down completely randomly.
Pair Corralation between IShares Insurance and IShares Oil
Considering the 90-day investment horizon iShares Insurance ETF is expected to generate 0.57 times more return on investment than IShares Oil. However, iShares Insurance ETF is 1.77 times less risky than IShares Oil. It trades about 0.08 of its potential returns per unit of risk. iShares Oil Equipment is currently generating about 0.0 per unit of risk. If you would invest 8,811 in iShares Insurance ETF on November 27, 2024 and sell it today you would earn a total of 3,988 from holding iShares Insurance ETF or generate 45.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Insurance ETF vs. iShares Oil Equipment
Performance |
| Timeline |
| iShares Insurance ETF |
| iShares Oil Equipment |
IShares Insurance and IShares Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Insurance and IShares Oil
The main advantage of trading using opposite IShares Insurance and IShares Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Insurance position performs unexpectedly, IShares Oil 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 Oil will offset losses from the drop in IShares Oil's long position.| IShares Insurance vs. iShares Broker Dealers Securities | IShares Insurance vs. SPDR SP Insurance | IShares Insurance vs. iShares Regional Banks | IShares Insurance vs. iShares Pharmaceuticals ETF |
| IShares Oil vs. Ultimus Managers Trust | IShares Oil vs. American Beacon Select | IShares Oil vs. First Trust Indxx | IShares Oil vs. Direxion Daily Regional |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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