Correlation Between IShares Industrials and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both IShares Industrials 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 Industrials 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 Industrials ETF and iShares Consumer Staples, you can compare the effects of market volatilities on IShares Industrials 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 Industrials with a short position of IShares Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Industrials and IShares Consumer.
Diversification Opportunities for IShares Industrials and IShares Consumer
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding iShares Industrials ETF and iShares Consumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Staples and IShares Industrials 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 Industrials 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 Staples has no effect on the direction of IShares Industrials i.e., IShares Industrials and IShares Consumer go up and down completely randomly.
Pair Corralation between IShares Industrials and IShares Consumer
Considering the 90-day investment horizon iShares Industrials ETF is expected to generate 0.87 times more return on investment than IShares Consumer. However, iShares Industrials ETF is 1.16 times less risky than IShares Consumer. It trades about 0.31 of its potential returns per unit of risk. iShares Consumer Staples is currently generating about 0.08 per unit of risk. If you would invest 13,282 in iShares Industrials ETF on November 3, 2024 and sell it today you would earn a total of 771.00 from holding iShares Industrials ETF or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Industrials ETF vs. iShares Consumer Staples
Performance |
| Timeline |
| iShares Industrials ETF |
| iShares Consumer Staples |
IShares Industrials and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Industrials and IShares Consumer
The main advantage of trading using opposite IShares Industrials and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Industrials 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 Industrials vs. iShares Consumer Discretionary | IShares Industrials vs. iShares Consumer Staples | IShares Industrials vs. iShares Basic Materials | IShares Industrials vs. iShares Utilities ETF |
| IShares Consumer vs. iShares Consumer Discretionary | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Utilities ETF | IShares Consumer vs. iShares Basic Materials |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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