Correlation Between IShares Trust and MicroSectors Gold
Can any of the company-specific risk be diversified away by investing in both IShares Trust and MicroSectors Gold 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 Trust and MicroSectors Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and MicroSectors Gold Miners, you can compare the effects of market volatilities on IShares Trust and MicroSectors Gold 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 Trust with a short position of MicroSectors Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and MicroSectors Gold.
Diversification Opportunities for IShares Trust and MicroSectors Gold
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and MicroSectors is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and MicroSectors Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors Gold Miners and IShares Trust 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 Trust are associated (or correlated) with MicroSectors Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors Gold Miners has no effect on the direction of IShares Trust i.e., IShares Trust and MicroSectors Gold go up and down completely randomly.
Pair Corralation between IShares Trust and MicroSectors Gold
Given the investment horizon of 90 days iShares Trust is expected to generate 0.1 times more return on investment than MicroSectors Gold. However, iShares Trust is 9.57 times less risky than MicroSectors Gold. It trades about 0.16 of its potential returns per unit of risk. MicroSectors Gold Miners is currently generating about -0.04 per unit of risk. If you would invest 2,402 in iShares Trust on August 28, 2024 and sell it today you would earn a total of 765.00 from holding iShares Trust or generate 31.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 78.25% |
| Values | Daily Returns |
iShares Trust vs. MicroSectors Gold Miners
Performance |
| Timeline |
| iShares Trust |
| MicroSectors Gold Miners |
IShares Trust and MicroSectors Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and MicroSectors Gold
The main advantage of trading using opposite IShares Trust and MicroSectors Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, MicroSectors Gold 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 MicroSectors Gold will offset losses from the drop in MicroSectors Gold's long position.| IShares Trust vs. Vanguard Total Stock | IShares Trust vs. SPDR SP 500 | IShares Trust vs. iShares Core SP | IShares Trust vs. Vanguard Total Bond |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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