Correlation Between IShares Global and IShares Technology
Can any of the company-specific risk be diversified away by investing in both IShares Global and IShares Technology 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 IShares Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Tech and iShares Technology ETF, you can compare the effects of market volatilities on IShares Global and IShares Technology 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 IShares Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and IShares Technology.
Diversification Opportunities for IShares Global and IShares Technology
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Tech and iShares Technology ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Technology ETF 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 Tech are associated (or correlated) with IShares Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Technology ETF has no effect on the direction of IShares Global i.e., IShares Global and IShares Technology go up and down completely randomly.
Pair Corralation between IShares Global and IShares Technology
Considering the 90-day investment horizon IShares Global is expected to generate 1.23 times less return on investment than IShares Technology. In addition to that, IShares Global is 1.01 times more volatile than iShares Technology ETF. It trades about 0.08 of its total potential returns per unit of risk. iShares Technology ETF is currently generating about 0.1 per unit of volatility. If you would invest 11,688 in iShares Technology ETF on August 24, 2024 and sell it today you would earn a total of 4,209 from holding iShares Technology ETF or generate 36.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Tech vs. iShares Technology ETF
Performance |
| Timeline |
| iShares Global Tech |
| iShares Technology ETF |
IShares Global and IShares Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and IShares Technology
The main advantage of trading using opposite IShares Global and IShares Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, IShares Technology 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 Technology will offset losses from the drop in IShares Technology's long position.| IShares Global vs. iShares Global Financials | IShares Global vs. iShares Global Comm | IShares Global vs. iShares Global Healthcare | IShares Global vs. iShares Expanded Tech |
| IShares Technology vs. iShares Healthcare ETF | IShares Technology vs. iShares Financials ETF | IShares Technology vs. iShares Telecommunications ETF | IShares Technology vs. iShares Industrials ETF |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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