Correlation Between IShares Industrials and Themes Transatlantic
Can any of the company-specific risk be diversified away by investing in both IShares Industrials and Themes Transatlantic 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 Themes Transatlantic 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 Themes Transatlantic Defense, you can compare the effects of market volatilities on IShares Industrials and Themes Transatlantic 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 Themes Transatlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Industrials and Themes Transatlantic.
Diversification Opportunities for IShares Industrials and Themes Transatlantic
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Themes is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Industrials ETF and Themes Transatlantic Defense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Transatlantic 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 Themes Transatlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Transatlantic has no effect on the direction of IShares Industrials i.e., IShares Industrials and Themes Transatlantic go up and down completely randomly.
Pair Corralation between IShares Industrials and Themes Transatlantic
Considering the 90-day investment horizon IShares Industrials is expected to generate 1.16 times less return on investment than Themes Transatlantic. But when comparing it to its historical volatility, iShares Industrials ETF is 1.06 times less risky than Themes Transatlantic. It trades about 0.3 of its potential returns per unit of risk. Themes Transatlantic Defense is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,531 in Themes Transatlantic Defense on November 3, 2024 and sell it today you would earn a total of 172.00 from holding Themes Transatlantic Defense or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Industrials ETF vs. Themes Transatlantic Defense
Performance |
| Timeline |
| iShares Industrials ETF |
| Themes Transatlantic |
IShares Industrials and Themes Transatlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Industrials and Themes Transatlantic
The main advantage of trading using opposite IShares Industrials and Themes Transatlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Industrials position performs unexpectedly, Themes Transatlantic 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 Themes Transatlantic will offset losses from the drop in Themes Transatlantic'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 |
| Themes Transatlantic vs. Ultimus Managers Trust | Themes Transatlantic vs. American Beacon Select | Themes Transatlantic vs. First Trust Indxx | Themes Transatlantic vs. Direxion Daily SP |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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