Correlation Between IShares SP and LG Cyber
Can any of the company-specific risk be diversified away by investing in both IShares SP and LG Cyber 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 SP and LG Cyber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and LG Cyber Security, you can compare the effects of market volatilities on IShares SP and LG Cyber 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 SP with a short position of LG Cyber. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and LG Cyber.
Diversification Opportunities for IShares SP and LG Cyber
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and ISPY is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and LG Cyber Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Cyber Security and IShares SP 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 SP 500 are associated (or correlated) with LG Cyber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Cyber Security has no effect on the direction of IShares SP i.e., IShares SP and LG Cyber go up and down completely randomly.
Pair Corralation between IShares SP and LG Cyber
Assuming the 90 days trading horizon IShares SP is expected to generate 1.03 times less return on investment than LG Cyber. But when comparing it to its historical volatility, iShares SP 500 is 1.67 times less risky than LG Cyber. It trades about 0.11 of its potential returns per unit of risk. LG Cyber Security is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,756 in LG Cyber Security on August 29, 2024 and sell it today you would earn a total of 929.00 from holding LG Cyber Security or generate 52.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP 500 vs. LG Cyber Security
Performance |
| Timeline |
| iShares SP 500 |
| LG Cyber Security |
IShares SP and LG Cyber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and LG Cyber
The main advantage of trading using opposite IShares SP and LG Cyber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, LG Cyber 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 LG Cyber will offset losses from the drop in LG Cyber's long position.The idea behind iShares SP 500 and LG Cyber Security pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LG Cyber vs. LG Russell 2000 | LG Cyber vs. VanEck Multi Asset Growth | LG Cyber vs. iShares III Public | LG Cyber vs. iShares Core MSCI |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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