Correlation Between IShares SP and Legal General
Can any of the company-specific risk be diversified away by investing in both IShares SP and Legal General 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 Legal General 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 Legal General UCITS, you can compare the effects of market volatilities on IShares SP and Legal General 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 Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Legal General.
Diversification Opportunities for IShares SP and Legal General
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Legal is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and Legal General UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General UCITS 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General UCITS has no effect on the direction of IShares SP i.e., IShares SP and Legal General go up and down completely randomly.
Pair Corralation between IShares SP and Legal General
Assuming the 90 days trading horizon iShares SP 500 is expected to generate 0.82 times more return on investment than Legal General. However, iShares SP 500 is 1.23 times less risky than Legal General. It trades about 0.27 of its potential returns per unit of risk. Legal General UCITS is currently generating about 0.12 per unit of risk. If you would invest 5,123 in iShares SP 500 on August 31, 2024 and sell it today you would earn a total of 564.00 from holding iShares SP 500 or generate 11.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.78% |
| Values | Daily Returns |
iShares SP 500 vs. Legal General UCITS
Performance |
| Timeline |
| iShares SP 500 |
| Legal General UCITS |
IShares SP and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and Legal General
The main advantage of trading using opposite IShares SP and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| IShares SP vs. iShares Core MSCI | IShares SP vs. Vanguard FTSE All World | IShares SP vs. BlackRock ESG Multi Asset | IShares SP vs. Pershing Square Holdings |
| Legal General vs. Legal General UCITS | Legal General vs. LG Russell 2000 | Legal General vs. VanEck Multi Asset Growth | Legal General vs. iShares III Public |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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