Correlation Between IShares Trust and Wahed FTSE
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Wahed FTSE 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 Wahed FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Wahed FTSE USA, you can compare the effects of market volatilities on IShares Trust and Wahed FTSE 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 Wahed FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Wahed FTSE.
Diversification Opportunities for IShares Trust and Wahed FTSE
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Wahed is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Wahed FTSE USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahed FTSE USA 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 Wahed FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahed FTSE USA has no effect on the direction of IShares Trust i.e., IShares Trust and Wahed FTSE go up and down completely randomly.
Pair Corralation between IShares Trust and Wahed FTSE
Given the investment horizon of 90 days IShares Trust is expected to generate 5.95 times less return on investment than Wahed FTSE. But when comparing it to its historical volatility, iShares Trust is 1.46 times less risky than Wahed FTSE. It trades about 0.07 of its potential returns per unit of risk. Wahed FTSE USA is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 5,297 in Wahed FTSE USA on September 12, 2024 and sell it today you would earn a total of 194.00 from holding Wahed FTSE USA or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares Trust vs. Wahed FTSE USA
Performance |
| Timeline |
| iShares Trust |
| Wahed FTSE USA |
IShares Trust and Wahed FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Wahed FTSE
The main advantage of trading using opposite IShares Trust and Wahed FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Wahed FTSE 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 Wahed FTSE will offset losses from the drop in Wahed FTSE's long position.| IShares Trust vs. Goldman Sachs Future | IShares Trust vs. ProShares Trust | IShares Trust vs. Horizon Kinetics SPAC | IShares Trust vs. PGIM Ultra Short |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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