Correlation Between IShares Industrials and US Global
Can any of the company-specific risk be diversified away by investing in both IShares Industrials and US Global 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 US Global 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 US Global Sea, you can compare the effects of market volatilities on IShares Industrials and US Global 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Industrials and US Global.
Diversification Opportunities for IShares Industrials and US Global
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and SEA is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding iShares Industrials ETF and US Global Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Sea 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 US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Sea has no effect on the direction of IShares Industrials i.e., IShares Industrials and US Global go up and down completely randomly.
Pair Corralation between IShares Industrials and US Global
Considering the 90-day investment horizon iShares Industrials ETF is expected to generate 1.18 times more return on investment than US Global. However, IShares Industrials is 1.18 times more volatile than US Global Sea. It trades about 0.32 of its potential returns per unit of risk. US Global Sea is currently generating about -0.21 per unit of risk. If you would invest 13,351 in iShares Industrials ETF on September 2, 2024 and sell it today you would earn a total of 1,042 from holding iShares Industrials ETF or generate 7.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Industrials ETF vs. US Global Sea
Performance |
| Timeline |
| iShares Industrials ETF |
| US Global Sea |
IShares Industrials and US Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Industrials and US Global
The main advantage of trading using opposite IShares Industrials and US Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Industrials position performs unexpectedly, US Global 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 US Global will offset losses from the drop in US Global'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 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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