Correlation Between IShares Trust and IShares Environmental
Can any of the company-specific risk be diversified away by investing in both IShares Trust and IShares Environmental 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 IShares Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and iShares Environmental Infrastructure, you can compare the effects of market volatilities on IShares Trust and IShares Environmental 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 IShares Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and IShares Environmental.
Diversification Opportunities for IShares Trust and IShares Environmental
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and IShares is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and iShares Environmental Infrastr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Environmental 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 IShares Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Environmental has no effect on the direction of IShares Trust i.e., IShares Trust and IShares Environmental go up and down completely randomly.
Pair Corralation between IShares Trust and IShares Environmental
Given the investment horizon of 90 days iShares Trust is expected to generate 1.65 times more return on investment than IShares Environmental. However, IShares Trust is 1.65 times more volatile than iShares Environmental Infrastructure. It trades about 0.08 of its potential returns per unit of risk. iShares Environmental Infrastructure is currently generating about 0.07 per unit of risk. If you would invest 2,374 in iShares Trust on September 1, 2024 and sell it today you would earn a total of 337.00 from holding iShares Trust or generate 14.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. iShares Environmental Infrastr
Performance |
| Timeline |
| iShares Trust |
| iShares Environmental |
IShares Trust and IShares Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and IShares Environmental
The main advantage of trading using opposite IShares Trust and IShares Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, IShares Environmental 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 Environmental will offset losses from the drop in IShares Environmental's long position.| IShares Trust vs. Freedom Day Dividend | IShares Trust vs. iShares MSCI China | IShares Trust vs. iShares Dividend and | IShares Trust vs. SmartETFs Dividend Builder |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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