Correlation Between Ishares III and Ishares II

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ishares III and Ishares II 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 III and Ishares II into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares III Plc and Ishares II PLC, you can compare the effects of market volatilities on Ishares III and Ishares II 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 III with a short position of Ishares II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares III and Ishares II.

Diversification Opportunities for Ishares III and Ishares II

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Ishares and Ishares is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ishares III Plc and Ishares II PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares II PLC and Ishares III 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 III Plc are associated (or correlated) with Ishares II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares II PLC has no effect on the direction of Ishares III i.e., Ishares III and Ishares II go up and down completely randomly.

Pair Corralation between Ishares III and Ishares II

Assuming the 90 days trading horizon Ishares III Plc is expected to generate 1.73 times more return on investment than Ishares II. However, Ishares III is 1.73 times more volatile than Ishares II PLC. It trades about 0.21 of its potential returns per unit of risk. Ishares II PLC is currently generating about 0.08 per unit of risk. If you would invest  668.00  in Ishares III Plc on September 5, 2024 and sell it today you would earn a total of  33.00  from holding Ishares III Plc or generate 4.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy92.86%
ValuesDaily Returns

Ishares III Plc  vs.  Ishares II PLC

 Performance 
       Timeline  
Ishares III Plc 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Ishares III Plc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ishares III may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Ishares II PLC 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ishares II PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Ishares II is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Ishares III and Ishares II Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ishares III and Ishares II

The main advantage of trading using opposite Ishares III and Ishares II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares III position performs unexpectedly, Ishares II 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 II will offset losses from the drop in Ishares II's long position.
The idea behind Ishares III Plc and Ishares II PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Insider Screener
Find insiders across different sectors to evaluate their impact on performance