Correlation Between IShares Infrastructure and IShares Blockchain
Can any of the company-specific risk be diversified away by investing in both IShares Infrastructure and IShares Blockchain 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 Infrastructure and IShares Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Infrastructure ETF and iShares Blockchain and, you can compare the effects of market volatilities on IShares Infrastructure and IShares Blockchain 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 Infrastructure with a short position of IShares Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Infrastructure and IShares Blockchain.
Diversification Opportunities for IShares Infrastructure and IShares Blockchain
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Infrastructure ETF and iShares Blockchain and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Blockchain and and IShares Infrastructure 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 Infrastructure ETF are associated (or correlated) with IShares Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Blockchain and has no effect on the direction of IShares Infrastructure i.e., IShares Infrastructure and IShares Blockchain go up and down completely randomly.
Pair Corralation between IShares Infrastructure and IShares Blockchain
Given the investment horizon of 90 days IShares Infrastructure is expected to generate 2.95 times less return on investment than IShares Blockchain. But when comparing it to its historical volatility, iShares Infrastructure ETF is 4.66 times less risky than IShares Blockchain. It trades about 0.28 of its potential returns per unit of risk. iShares Blockchain and is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,516 in iShares Blockchain and on August 27, 2024 and sell it today you would earn a total of 721.00 from holding iShares Blockchain and or generate 20.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Infrastructure ETF vs. iShares Blockchain and
Performance |
| Timeline |
| iShares Infrastructure |
| iShares Blockchain and |
IShares Infrastructure and IShares Blockchain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Infrastructure and IShares Blockchain
The main advantage of trading using opposite IShares Infrastructure and IShares Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Infrastructure position performs unexpectedly, IShares Blockchain 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 Blockchain will offset losses from the drop in IShares Blockchain's long position.The idea behind iShares Infrastructure ETF and iShares Blockchain and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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