Correlation Between IShares Global and IXUP
Can any of the company-specific risk be diversified away by investing in both IShares Global and IXUP 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 IXUP 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 IXUP, you can compare the effects of market volatilities on IShares Global and IXUP 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 IXUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and IXUP.
Diversification Opportunities for IShares Global and IXUP
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IXUP is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and IXUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IXUP 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 IXUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IXUP has no effect on the direction of IShares Global i.e., IShares Global and IXUP go up and down completely randomly.
Pair Corralation between IShares Global and IXUP
Assuming the 90 days trading horizon iShares Global Healthcare is expected to under-perform the IXUP. But the etf apears to be less risky and, when comparing its historical volatility, iShares Global Healthcare is 7.8 times less risky than IXUP. The etf trades about -0.13 of its potential returns per unit of risk. The IXUP is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1.25 in IXUP on August 29, 2024 and sell it today you would lose (0.05) from holding IXUP or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Healthcare vs. IXUP
Performance |
| Timeline |
| iShares Global Healthcare |
| IXUP |
IShares Global and IXUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and IXUP
The main advantage of trading using opposite IShares Global and IXUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, IXUP 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 IXUP will offset losses from the drop in IXUP's long position.| IShares Global vs. iShares MSCI Emerging | IShares Global vs. iShares Global Aggregate | IShares Global vs. iShares CoreSP MidCap | IShares Global vs. iShares SP 500 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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