Correlation Between IShares Healthcare and IQ Healthy
Can any of the company-specific risk be diversified away by investing in both IShares Healthcare and IQ Healthy 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 Healthcare and IQ Healthy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Healthcare ETF and IQ Healthy Hearts, you can compare the effects of market volatilities on IShares Healthcare and IQ Healthy 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 Healthcare with a short position of IQ Healthy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Healthcare and IQ Healthy.
Diversification Opportunities for IShares Healthcare and IQ Healthy
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and HART is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Healthcare ETF and IQ Healthy Hearts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Healthy Hearts and IShares Healthcare 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 Healthcare ETF are associated (or correlated) with IQ Healthy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Healthy Hearts has no effect on the direction of IShares Healthcare i.e., IShares Healthcare and IQ Healthy go up and down completely randomly.
Pair Corralation between IShares Healthcare and IQ Healthy
Considering the 90-day investment horizon iShares Healthcare ETF is expected to under-perform the IQ Healthy. In addition to that, IShares Healthcare is 1.42 times more volatile than IQ Healthy Hearts. It trades about -0.06 of its total potential returns per unit of risk. IQ Healthy Hearts is currently generating about -0.02 per unit of volatility. If you would invest 3,196 in IQ Healthy Hearts on August 31, 2024 and sell it today you would lose (9.00) from holding IQ Healthy Hearts or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Healthcare ETF vs. IQ Healthy Hearts
Performance |
| Timeline |
| iShares Healthcare ETF |
| IQ Healthy Hearts |
IShares Healthcare and IQ Healthy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Healthcare and IQ Healthy
The main advantage of trading using opposite IShares Healthcare and IQ Healthy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Healthcare position performs unexpectedly, IQ Healthy 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 IQ Healthy will offset losses from the drop in IQ Healthy's long position.| IShares Healthcare vs. iShares Financials ETF | IShares Healthcare vs. iShares Consumer Discretionary | IShares Healthcare vs. iShares Industrials ETF | IShares Healthcare vs. iShares Consumer Staples |
| IQ Healthy vs. Fidelity MSCI Financials | IQ Healthy vs. Fidelity MSCI Consumer | IQ Healthy vs. Fidelity MSCI Consumer | IQ Healthy vs. Fidelity MSCI Industrials |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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