Correlation Between MercadoLibre and IShares Trust
Can any of the company-specific risk be diversified away by investing in both MercadoLibre and IShares Trust 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 MercadoLibre and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MercadoLibre and iShares Trust , you can compare the effects of market volatilities on MercadoLibre and IShares Trust 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 MercadoLibre with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of MercadoLibre and IShares Trust.
Diversification Opportunities for MercadoLibre and IShares Trust
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MercadoLibre and IShares is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding MercadoLibre and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and MercadoLibre 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 MercadoLibre are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of MercadoLibre i.e., MercadoLibre and IShares Trust go up and down completely randomly.
Pair Corralation between MercadoLibre and IShares Trust
Assuming the 90 days trading horizon MercadoLibre is expected to generate 7.06 times more return on investment than IShares Trust. However, MercadoLibre is 7.06 times more volatile than iShares Trust . It trades about 0.03 of its potential returns per unit of risk. iShares Trust is currently generating about 0.15 per unit of risk. If you would invest 4,085,700 in MercadoLibre on August 25, 2024 and sell it today you would earn a total of 10,869 from holding MercadoLibre or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
MercadoLibre vs. iShares Trust
Performance |
| Timeline |
| MercadoLibre |
| iShares Trust |
MercadoLibre and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MercadoLibre and IShares Trust
The main advantage of trading using opposite MercadoLibre and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MercadoLibre position performs unexpectedly, IShares Trust 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 Trust will offset losses from the drop in IShares Trust's long position.| MercadoLibre vs. Hoteles City Express | MercadoLibre vs. Southwest Airlines | MercadoLibre vs. The Bank of | MercadoLibre vs. Genworth Financial |
| IShares Trust vs. Vanguard Index Funds | IShares Trust vs. Vanguard Index Funds | IShares Trust vs. SPDR SP 500 | IShares Trust vs. iShares Trust |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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