Correlation Between IShares Utilities and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both IShares Utilities and IShares Consumer 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 Utilities and IShares Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Utilities ETF and iShares Consumer Staples, you can compare the effects of market volatilities on IShares Utilities and IShares Consumer 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 Utilities with a short position of IShares Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Utilities and IShares Consumer.
Diversification Opportunities for IShares Utilities and IShares Consumer
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding iShares Utilities ETF and iShares Consumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Staples and IShares Utilities 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 Utilities ETF are associated (or correlated) with IShares Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Staples has no effect on the direction of IShares Utilities i.e., IShares Utilities and IShares Consumer go up and down completely randomly.
Pair Corralation between IShares Utilities and IShares Consumer
Considering the 90-day investment horizon iShares Utilities ETF is expected to generate 1.47 times more return on investment than IShares Consumer. However, IShares Utilities is 1.47 times more volatile than iShares Consumer Staples. It trades about 0.05 of its potential returns per unit of risk. iShares Consumer Staples is currently generating about 0.02 per unit of risk. If you would invest 8,306 in iShares Utilities ETF on August 24, 2024 and sell it today you would earn a total of 2,097 from holding iShares Utilities ETF or generate 25.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Utilities ETF vs. iShares Consumer Staples
Performance |
| Timeline |
| iShares Utilities ETF |
| iShares Consumer Staples |
IShares Utilities and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Utilities and IShares Consumer
The main advantage of trading using opposite IShares Utilities and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Utilities position performs unexpectedly, IShares Consumer 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 Consumer will offset losses from the drop in IShares Consumer's long position.| IShares Utilities vs. iShares Industrials ETF | IShares Utilities vs. iShares Consumer Discretionary | IShares Utilities vs. iShares Consumer Staples | IShares Utilities vs. iShares Telecommunications ETF |
| IShares Consumer vs. iShares Consumer Discretionary | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Utilities ETF | IShares Consumer vs. iShares Basic Materials |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |