Correlation Between IShares Global and IShares Healthcare
Can any of the company-specific risk be diversified away by investing in both IShares Global and IShares Healthcare 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 Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Comm and iShares Healthcare ETF, you can compare the effects of market volatilities on IShares Global and IShares Healthcare 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 Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and IShares Healthcare.
Diversification Opportunities for IShares Global and IShares Healthcare
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and IShares is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Comm and iShares Healthcare ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Healthcare 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 Comm are associated (or correlated) with IShares Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Healthcare ETF has no effect on the direction of IShares Global i.e., IShares Global and IShares Healthcare go up and down completely randomly.
Pair Corralation between IShares Global and IShares Healthcare
Considering the 90-day investment horizon iShares Global Comm is expected to generate 1.0 times more return on investment than IShares Healthcare. However, iShares Global Comm is 1.0 times less risky than IShares Healthcare. It trades about 0.1 of its potential returns per unit of risk. iShares Healthcare ETF is currently generating about -0.13 per unit of risk. If you would invest 9,399 in iShares Global Comm on August 28, 2024 and sell it today you would earn a total of 173.00 from holding iShares Global Comm or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Comm vs. iShares Healthcare ETF
Performance |
| Timeline |
| iShares Global Comm |
| iShares Healthcare ETF |
IShares Global and IShares Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and IShares Healthcare
The main advantage of trading using opposite IShares Global and IShares Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, IShares Healthcare 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 Healthcare will offset losses from the drop in IShares Healthcare's long position.| IShares Global vs. Vanguard Industrials Index | IShares Global vs. Vanguard Materials Index | IShares Global vs. Vanguard Consumer Discretionary | IShares Global vs. Vanguard Consumer Staples |
| IShares Healthcare vs. Global X Clean | IShares Healthcare vs. Global X Renewable | IShares Healthcare vs. Global X Thematic | IShares Healthcare vs. Global X AgTech |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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