Correlation Between IShares Global and IShares 1
Can any of the company-specific risk be diversified away by investing in both IShares Global and IShares 1 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 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Infrastructure and iShares 1 3 Year, you can compare the effects of market volatilities on IShares Global and IShares 1 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 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and IShares 1.
Diversification Opportunities for IShares Global and IShares 1
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Infrastructure and iShares 1 3 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 3 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 Infrastructure are associated (or correlated) with IShares 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 3 has no effect on the direction of IShares Global i.e., IShares Global and IShares 1 go up and down completely randomly.
Pair Corralation between IShares Global and IShares 1
Considering the 90-day investment horizon iShares Global Infrastructure is expected to generate 1.7 times more return on investment than IShares 1. However, IShares Global is 1.7 times more volatile than iShares 1 3 Year. It trades about 0.15 of its potential returns per unit of risk. iShares 1 3 Year is currently generating about 0.01 per unit of risk. If you would invest 4,939 in iShares Global Infrastructure on September 3, 2024 and sell it today you would earn a total of 631.00 from holding iShares Global Infrastructure or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Infrastructure vs. iShares 1 3 Year
Performance |
| Timeline |
| iShares Global Infra |
| iShares 1 3 |
IShares Global and IShares 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and IShares 1
The main advantage of trading using opposite IShares Global and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, IShares 1 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 1 will offset losses from the drop in IShares 1's long position.| IShares Global vs. Global X Infrastructure | IShares Global vs. FlexShares STOXX Global | IShares Global vs. Invesco Dynamic Leisure | IShares Global vs. SPDR SP Global |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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