Correlation Between IShares Healthcare and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both IShares Healthcare and IShares Consumer 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 IShares Consumer 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 iShares Consumer Discretionary, you can compare the effects of market volatilities on IShares Healthcare and IShares Consumer 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 IShares Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Healthcare and IShares Consumer.
Diversification Opportunities for IShares Healthcare and IShares Consumer
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and IShares is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding iShares Healthcare ETF and iShares Consumer Discretionary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Dis 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 IShares Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Dis has no effect on the direction of IShares Healthcare i.e., IShares Healthcare and IShares Consumer go up and down completely randomly.
Pair Corralation between IShares Healthcare and IShares Consumer
Considering the 90-day investment horizon IShares Healthcare is expected to generate 1.11 times less return on investment than IShares Consumer. In addition to that, IShares Healthcare is 1.27 times more volatile than iShares Consumer Discretionary. It trades about 0.15 of its total potential returns per unit of risk. iShares Consumer Discretionary is currently generating about 0.21 per unit of volatility. If you would invest 9,796 in iShares Consumer Discretionary on November 18, 2024 and sell it today you would earn a total of 302.00 from holding iShares Consumer Discretionary or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Healthcare ETF vs. iShares Consumer Discretionary
Performance |
| Timeline |
| iShares Healthcare ETF |
| iShares Consumer Dis |
IShares Healthcare and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Healthcare and IShares Consumer
The main advantage of trading using opposite IShares Healthcare and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Healthcare position performs unexpectedly, IShares Consumer 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 Consumer will offset losses from the drop in IShares Consumer'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 |
| IShares Consumer vs. iShares Consumer Staples | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Basic Materials | IShares Consumer vs. iShares Utilities 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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