Correlation Between IShares Consumer and IShares Global
Can any of the company-specific risk be diversified away by investing in both IShares Consumer and IShares 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 Consumer and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Consumer Staples and iShares Global Consumer, you can compare the effects of market volatilities on IShares Consumer and IShares 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 Consumer with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Consumer and IShares Global.
Diversification Opportunities for IShares Consumer and IShares Global
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares Consumer Staples and iShares Global Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Consumer and IShares Consumer 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 Consumer Staples are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Consumer has no effect on the direction of IShares Consumer i.e., IShares Consumer and IShares Global go up and down completely randomly.
Pair Corralation between IShares Consumer and IShares Global
Considering the 90-day investment horizon iShares Consumer Staples is expected to generate 0.84 times more return on investment than IShares Global. However, iShares Consumer Staples is 1.19 times less risky than IShares Global. It trades about 0.1 of its potential returns per unit of risk. iShares Global Consumer is currently generating about -0.04 per unit of risk. If you would invest 6,898 in iShares Consumer Staples on August 26, 2024 and sell it today you would earn a total of 93.00 from holding iShares Consumer Staples or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Consumer Staples vs. iShares Global Consumer
Performance |
| Timeline |
| iShares Consumer Staples |
| iShares Global Consumer |
IShares Consumer and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Consumer and IShares Global
The main advantage of trading using opposite IShares Consumer and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Consumer position performs unexpectedly, IShares 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 IShares Global will offset losses from the drop in IShares Global's long position.| IShares Consumer vs. iShares Consumer Discretionary | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Utilities ETF | IShares Consumer vs. iShares Basic Materials |
| IShares Global vs. Vanguard Consumer Discretionary | IShares Global vs. Vanguard Utilities Index | IShares Global vs. Vanguard Industrials Index | IShares Global vs. Vanguard Materials Index |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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