Correlation Between IShares Global and IShares Energy
Can any of the company-specific risk be diversified away by investing in both IShares Global and IShares Energy 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 IShares Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Clean and iShares Energy Storage, you can compare the effects of market volatilities on IShares Global and IShares Energy 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 IShares Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and IShares Energy.
Diversification Opportunities for IShares Global and IShares Energy
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Clean and iShares Energy Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Energy Storage 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 Clean are associated (or correlated) with IShares Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Energy Storage has no effect on the direction of IShares Global i.e., IShares Global and IShares Energy go up and down completely randomly.
Pair Corralation between IShares Global and IShares Energy
Given the investment horizon of 90 days iShares Global Clean is expected to under-perform the IShares Energy. In addition to that, IShares Global is 1.04 times more volatile than iShares Energy Storage. It trades about -0.08 of its total potential returns per unit of risk. iShares Energy Storage is currently generating about -0.03 per unit of volatility. If you would invest 2,314 in iShares Energy Storage on November 18, 2024 and sell it today you would lose (58.00) from holding iShares Energy Storage or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Clean vs. iShares Energy Storage
Performance |
| Timeline |
| iShares Global Clean |
| iShares Energy Storage |
IShares Global and IShares Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and IShares Energy
The main advantage of trading using opposite IShares Global and IShares Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, IShares Energy 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 Energy will offset losses from the drop in IShares Energy's long position.| IShares Global vs. Invesco Solar ETF | IShares Global vs. First Trust NASDAQ | IShares Global vs. Invesco WilderHill Clean | IShares Global vs. Global X Lithium |
| IShares Energy vs. iShares Dividend and | IShares Energy vs. Martin Currie Sustainable | IShares Energy vs. VictoryShares THB Mid | IShares Energy vs. Mast Global Battery |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |