Correlation Between IShares Global and IShares Infrastructure
Can any of the company-specific risk be diversified away by investing in both IShares Global and IShares Infrastructure 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 Global and IShares Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Utilities and iShares Infrastructure ETF, you can compare the effects of market volatilities on IShares Global and IShares Infrastructure 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 Global with a short position of IShares Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and IShares Infrastructure.
Diversification Opportunities for IShares Global and IShares Infrastructure
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IShares and IShares is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Utilities and iShares Infrastructure ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Infrastructure and IShares Global 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 Global Utilities are associated (or correlated) with IShares Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Infrastructure has no effect on the direction of IShares Global i.e., IShares Global and IShares Infrastructure go up and down completely randomly.
Pair Corralation between IShares Global and IShares Infrastructure
Considering the 90-day investment horizon IShares Global is expected to generate 3.95 times less return on investment than IShares Infrastructure. But when comparing it to its historical volatility, iShares Global Utilities is 1.4 times less risky than IShares Infrastructure. It trades about 0.13 of its potential returns per unit of risk. iShares Infrastructure ETF is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 4,690 in iShares Infrastructure ETF on September 1, 2024 and sell it today you would earn a total of 470.00 from holding iShares Infrastructure ETF or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares Global Utilities vs. iShares Infrastructure ETF
Performance |
| Timeline |
| iShares Global Utilities |
| iShares Infrastructure |
IShares Global and IShares Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and IShares Infrastructure
The main advantage of trading using opposite IShares Global and IShares Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, IShares Infrastructure 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 Infrastructure will offset losses from the drop in IShares Infrastructure's long position.| IShares Global vs. iShares Global Consumer | IShares Global vs. iShares Global Industrials | IShares Global vs. iShares Global Consumer | IShares Global vs. iShares Global Materials |
| IShares Infrastructure vs. VanEck Vectors ETF | IShares Infrastructure vs. Global X Wind | IShares Infrastructure vs. Invesco Electric Vehicle | IShares Infrastructure vs. Global X Disruptive |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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