Correlation Between IShares Expanded and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both IShares Expanded 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 Expanded 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 Expanded Tech Software and iShares Consumer Discretionary, you can compare the effects of market volatilities on IShares Expanded 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 Expanded with a short position of IShares Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Expanded and IShares Consumer.
Diversification Opportunities for IShares Expanded and IShares Consumer
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 Expanded Tech Software and iShares Consumer Discretionary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Dis 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 Software 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 Dis has no effect on the direction of IShares Expanded i.e., IShares Expanded and IShares Consumer go up and down completely randomly.
Pair Corralation between IShares Expanded and IShares Consumer
Considering the 90-day investment horizon iShares Expanded Tech Software is expected to generate 1.77 times more return on investment than IShares Consumer. However, IShares Expanded is 1.77 times more volatile than iShares Consumer Discretionary. It trades about 0.25 of its potential returns per unit of risk. iShares Consumer Discretionary is currently generating about 0.21 per unit of risk. If you would invest 10,032 in iShares Expanded Tech Software on November 18, 2024 and sell it today you would earn a total of 644.00 from holding iShares Expanded Tech Software or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Expanded Tech Software vs. iShares Consumer Discretionary
Performance |
| Timeline |
| iShares Expanded Tech |
| iShares Consumer Dis |
IShares Expanded and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Expanded and IShares Consumer
The main advantage of trading using opposite IShares Expanded and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Expanded 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 Expanded vs. First Trust Technology | IShares Expanded vs. Fidelity MSCI Information | IShares Expanded vs. First Trust Nasdaq | IShares Expanded vs. iShares Global Tech |
| IShares Consumer vs. iShares Consumer Staples | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Basic Materials | IShares Consumer vs. iShares Utilities 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |