Correlation Between IShares Expanded and IShares Technology
Can any of the company-specific risk be diversified away by investing in both IShares Expanded and IShares Technology 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 Expanded and IShares Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Expanded Tech and iShares Technology ETF, you can compare the effects of market volatilities on IShares Expanded and IShares Technology 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 Expanded with a short position of IShares Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Expanded and IShares Technology.
Diversification Opportunities for IShares Expanded and IShares Technology
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech and iShares Technology ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Technology ETF and IShares Expanded 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 Expanded Tech are associated (or correlated) with IShares Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Technology ETF has no effect on the direction of IShares Expanded i.e., IShares Expanded and IShares Technology go up and down completely randomly.
Pair Corralation between IShares Expanded and IShares Technology
Considering the 90-day investment horizon iShares Expanded Tech is expected to generate 0.92 times more return on investment than IShares Technology. However, iShares Expanded Tech is 1.09 times less risky than IShares Technology. It trades about 0.14 of its potential returns per unit of risk. iShares Technology ETF is currently generating about 0.09 per unit of risk. If you would invest 10,392 in iShares Expanded Tech on November 18, 2024 and sell it today you would earn a total of 419.00 from holding iShares Expanded Tech or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Expanded Tech vs. iShares Technology ETF
Performance |
| Timeline |
| iShares Expanded Tech |
| iShares Technology ETF |
IShares Expanded and IShares Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Expanded and IShares Technology
The main advantage of trading using opposite IShares Expanded and IShares Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Expanded position performs unexpectedly, IShares Technology 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 Technology will offset losses from the drop in IShares Technology's long position.| IShares Expanded vs. iShares Global Tech | IShares Expanded vs. iShares Technology ETF | IShares Expanded vs. iShares Consumer Discretionary | IShares Expanded vs. iShares Expanded Tech Software |
| IShares Technology vs. iShares Healthcare ETF | IShares Technology vs. iShares Financials ETF | IShares Technology vs. iShares Telecommunications ETF | IShares Technology vs. iShares Industrials ETF |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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