Correlation Between IShares Global and Energy Resources
Can any of the company-specific risk be diversified away by investing in both IShares Global and Energy Resources 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 Global and Energy Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Healthcare and Energy Resources, you can compare the effects of market volatilities on IShares Global and Energy Resources 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 Global with a short position of Energy Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Energy Resources.
Diversification Opportunities for IShares Global and Energy Resources
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Energy is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Resources and IShares Global 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 Global Healthcare are associated (or correlated) with Energy Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Resources has no effect on the direction of IShares Global i.e., IShares Global and Energy Resources go up and down completely randomly.
Pair Corralation between IShares Global and Energy Resources
Assuming the 90 days trading horizon IShares Global is expected to generate 4.65 times less return on investment than Energy Resources. But when comparing it to its historical volatility, iShares Global Healthcare is 10.36 times less risky than Energy Resources. It trades about 0.12 of its potential returns per unit of risk. Energy Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.30 in Energy Resources on November 18, 2024 and sell it today you would earn a total of 0.00 from holding Energy Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Healthcare vs. Energy Resources
Performance |
| Timeline |
| iShares Global Healthcare |
| Energy Resources |
IShares Global and Energy Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and Energy Resources
The main advantage of trading using opposite IShares Global and Energy Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, Energy Resources 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 Energy Resources will offset losses from the drop in Energy Resources' long position.| IShares Global vs. VanEck Global Listed | IShares Global vs. BetaShares Crypto Innovators | IShares Global vs. BetaShares Global Government | IShares Global vs. BetaShares Geared Australian |
| Energy Resources vs. Microequities Asset Management | Energy Resources vs. MFF Capital Investments | Energy Resources vs. Centaurus Metals | Energy Resources vs. Hammer Metals |
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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