Correlation Between IShares International and IShares Cohen
Can any of the company-specific risk be diversified away by investing in both IShares International and IShares Cohen 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 International and IShares Cohen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares International Developed and iShares Cohen Steers, you can compare the effects of market volatilities on IShares International and IShares Cohen 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 International with a short position of IShares Cohen. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and IShares Cohen.
Diversification Opportunities for IShares International and IShares Cohen
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Develope and iShares Cohen Steers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Cohen Steers and IShares International 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 International Developed are associated (or correlated) with IShares Cohen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Cohen Steers has no effect on the direction of IShares International i.e., IShares International and IShares Cohen go up and down completely randomly.
Pair Corralation between IShares International and IShares Cohen
Given the investment horizon of 90 days IShares International is expected to generate 5.58 times less return on investment than IShares Cohen. But when comparing it to its historical volatility, iShares International Developed is 1.13 times less risky than IShares Cohen. It trades about 0.01 of its potential returns per unit of risk. iShares Cohen Steers is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,317 in iShares Cohen Steers on August 27, 2024 and sell it today you would earn a total of 1,175 from holding iShares Cohen Steers or generate 22.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares International Develope vs. iShares Cohen Steers
Performance |
| Timeline |
| iShares International |
| iShares Cohen Steers |
IShares International and IShares Cohen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and IShares Cohen
The main advantage of trading using opposite IShares International and IShares Cohen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International position performs unexpectedly, IShares Cohen 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 Cohen will offset losses from the drop in IShares Cohen's long position.| IShares International vs. iShares International Treasury | IShares International vs. iShares 1 3 Year | IShares International vs. iShares MSCI Emerging |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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