Correlation Between IShares Healthcare and Octane All
Can any of the company-specific risk be diversified away by investing in both IShares Healthcare and Octane All 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 Octane All 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 Octane All Cap Value, you can compare the effects of market volatilities on IShares Healthcare and Octane All 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 Octane All. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Healthcare and Octane All.
Diversification Opportunities for IShares Healthcare and Octane All
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and Octane is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding iShares Healthcare ETF and Octane All Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octane All Cap 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 Octane All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octane All Cap has no effect on the direction of IShares Healthcare i.e., IShares Healthcare and Octane All go up and down completely randomly.
Pair Corralation between IShares Healthcare and Octane All
Considering the 90-day investment horizon iShares Healthcare ETF is expected to generate 0.76 times more return on investment than Octane All. However, iShares Healthcare ETF is 1.31 times less risky than Octane All. It trades about -0.25 of its potential returns per unit of risk. Octane All Cap Value is currently generating about -0.23 per unit of risk. If you would invest 6,307 in iShares Healthcare ETF on September 12, 2024 and sell it today you would lose (288.00) from holding iShares Healthcare ETF or give up 4.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Healthcare ETF vs. Octane All Cap Value
Performance |
| Timeline |
| iShares Healthcare ETF |
| Octane All Cap |
IShares Healthcare and Octane All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Healthcare and Octane All
The main advantage of trading using opposite IShares Healthcare and Octane All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Healthcare position performs unexpectedly, Octane All 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 Octane All will offset losses from the drop in Octane All'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 |
| Octane All vs. Ultimus Managers Trust | Octane All vs. Direxion Daily SP | Octane All vs. EA Series Trust | Octane All vs. Global X MLP |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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