Correlation Between IShares SP and IShares Paris
Can any of the company-specific risk be diversified away by investing in both IShares SP and IShares Paris 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 IShares Paris 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 iShares Paris Aligned Climate, you can compare the effects of market volatilities on IShares SP and IShares Paris 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 IShares Paris. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and IShares Paris.
Diversification Opportunities for IShares SP and IShares Paris
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and iShares Paris Aligned Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Paris Aligned 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 IShares Paris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Paris Aligned has no effect on the direction of IShares SP i.e., IShares SP and IShares Paris go up and down completely randomly.
Pair Corralation between IShares SP and IShares Paris
Considering the 90-day investment horizon iShares SP 500 is expected to generate 1.14 times more return on investment than IShares Paris. However, IShares SP is 1.14 times more volatile than iShares Paris Aligned Climate. It trades about 0.12 of its potential returns per unit of risk. iShares Paris Aligned Climate is currently generating about 0.11 per unit of risk. If you would invest 5,961 in iShares SP 500 on November 19, 2024 and sell it today you would earn a total of 4,702 from holding iShares SP 500 or generate 78.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP 500 vs. iShares Paris Aligned Climate
Performance |
| Timeline |
| iShares SP 500 |
| iShares Paris Aligned |
IShares SP and IShares Paris Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and IShares Paris
The main advantage of trading using opposite IShares SP and IShares Paris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, IShares Paris 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 IShares Paris will offset losses from the drop in IShares Paris' long position.| IShares SP vs. FT Vest Equity | IShares SP vs. Northern Lights | IShares SP vs. Dimensional International High | IShares SP vs. First Trust Exchange Traded |
| IShares Paris vs. Vanguard Growth Index | IShares Paris vs. iShares Russell 1000 | IShares Paris vs. iShares SP 500 | IShares Paris vs. SPDR Portfolio SP |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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