Correlation Between IShares Edge and IShares High
Can any of the company-specific risk be diversified away by investing in both IShares Edge and IShares High 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 Edge and IShares High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Edge MSCI and iShares High Yield, you can compare the effects of market volatilities on IShares Edge and IShares High 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 Edge with a short position of IShares High. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Edge and IShares High.
Diversification Opportunities for IShares Edge and IShares High
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and IShares is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding iShares Edge MSCI and iShares High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares High Yield and IShares Edge 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 Edge MSCI are associated (or correlated) with IShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares High Yield has no effect on the direction of IShares Edge i.e., IShares Edge and IShares High go up and down completely randomly.
Pair Corralation between IShares Edge and IShares High
Assuming the 90 days trading horizon iShares Edge MSCI is expected to under-perform the IShares High. In addition to that, IShares Edge is 1.23 times more volatile than iShares High Yield. It trades about -0.07 of its total potential returns per unit of risk. iShares High Yield is currently generating about 0.39 per unit of volatility. If you would invest 537.00 in iShares High Yield on August 27, 2024 and sell it today you would earn a total of 41.00 from holding iShares High Yield or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Edge MSCI vs. iShares High Yield
Performance |
| Timeline |
| iShares Edge MSCI |
| iShares High Yield |
IShares Edge and IShares High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Edge and IShares High
The main advantage of trading using opposite IShares Edge and IShares High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Edge position performs unexpectedly, IShares High 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 High will offset losses from the drop in IShares High's long position.| IShares Edge vs. SPDR Dow Jones | IShares Edge vs. iShares SP 500 | IShares Edge vs. iShares China CNY | IShares Edge vs. iShares Core MSCI |
| IShares High vs. SPDR Dow Jones | IShares High vs. iShares SP 500 | IShares High vs. iShares China CNY | IShares High vs. iShares Core MSCI |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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