Correlation Between IShares Trust and IShares Broad
Can any of the company-specific risk be diversified away by investing in both IShares Trust and IShares Broad 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 Broad 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 Broad USD, you can compare the effects of market volatilities on IShares Trust and IShares Broad 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 Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and IShares Broad.
Diversification Opportunities for IShares Trust and IShares Broad
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and iShares Broad USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Broad USD 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 Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Broad USD has no effect on the direction of IShares Trust i.e., IShares Trust and IShares Broad go up and down completely randomly.
Pair Corralation between IShares Trust and IShares Broad
Given the investment horizon of 90 days iShares Trust is expected to generate 4.69 times more return on investment than IShares Broad. However, IShares Trust is 4.69 times more volatile than iShares Broad USD. It trades about 0.09 of its potential returns per unit of risk. iShares Broad USD is currently generating about 0.06 per unit of risk. If you would invest 7,885 in iShares Trust on August 30, 2024 and sell it today you would earn a total of 277.00 from holding iShares Trust or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. iShares Broad USD
Performance |
| Timeline |
| iShares Trust |
| iShares Broad USD |
IShares Trust and IShares Broad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and IShares Broad
The main advantage of trading using opposite IShares Trust and IShares Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, IShares Broad 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 Broad will offset losses from the drop in IShares Broad's long position.| IShares Trust vs. First Trust Exchange Traded | IShares Trust vs. Ultimus Managers Trust | IShares Trust vs. Horizon Kinetics Medical | IShares Trust vs. Harbor Health Care |
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.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |