Correlation Between IShares Trust and SGI Enhanced
Can any of the company-specific risk be diversified away by investing in both IShares Trust and SGI Enhanced 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 SGI Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and SGI Enhanced Nasdaq 100, you can compare the effects of market volatilities on IShares Trust and SGI Enhanced 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 SGI Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and SGI Enhanced.
Diversification Opportunities for IShares Trust and SGI Enhanced
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and SGI is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and SGI Enhanced Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGI Enhanced Nasdaq 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 SGI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGI Enhanced Nasdaq has no effect on the direction of IShares Trust i.e., IShares Trust and SGI Enhanced go up and down completely randomly.
Pair Corralation between IShares Trust and SGI Enhanced
Given the investment horizon of 90 days IShares Trust is expected to generate 1.09 times less return on investment than SGI Enhanced. But when comparing it to its historical volatility, iShares Trust is 1.98 times less risky than SGI Enhanced. It trades about 0.12 of its potential returns per unit of risk. SGI Enhanced Nasdaq 100 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,500 in SGI Enhanced Nasdaq 100 on September 1, 2024 and sell it today you would earn a total of 248.00 from holding SGI Enhanced Nasdaq 100 or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares Trust vs. SGI Enhanced Nasdaq 100
Performance |
| Timeline |
| iShares Trust |
| SGI Enhanced Nasdaq |
IShares Trust and SGI Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and SGI Enhanced
The main advantage of trading using opposite IShares Trust and SGI Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, SGI Enhanced 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 SGI Enhanced will offset losses from the drop in SGI Enhanced's long position.| IShares Trust vs. Prime Medicine, Common | IShares Trust vs. Harbor ETF Trust | IShares Trust vs. IQ Healthy Hearts | IShares Trust vs. DBX ETF Trust |
| SGI Enhanced vs. Global X SP | SGI Enhanced vs. Amplify CWP Enhanced | SGI Enhanced vs. JPMorgan Equity Premium |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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