Correlation Between IXUP and IShares Global
Can any of the company-specific risk be diversified away by investing in both IXUP and IShares Global 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 IXUP and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IXUP and iShares Global Healthcare, you can compare the effects of market volatilities on IXUP and IShares Global 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 IXUP with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IXUP and IShares Global.
Diversification Opportunities for IXUP and IShares Global
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IXUP and IShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding IXUP and iShares Global Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Healthcare and IXUP 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 IXUP are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Healthcare has no effect on the direction of IXUP i.e., IXUP and IShares Global go up and down completely randomly.
Pair Corralation between IXUP and IShares Global
Assuming the 90 days trading horizon IXUP is expected to generate 7.8 times more return on investment than IShares Global. However, IXUP is 7.8 times more volatile than iShares Global Healthcare. It trades about 0.01 of its potential returns per unit of risk. iShares Global Healthcare is currently generating about -0.13 per unit of risk. 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 |
IXUP vs. iShares Global Healthcare
Performance |
| Timeline |
| IXUP |
| iShares Global Healthcare |
IXUP and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IXUP and IShares Global
The main advantage of trading using opposite IXUP and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IXUP position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.The idea behind IXUP and iShares Global Healthcare pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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