Correlation Between Research Affiliates and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Research Affiliates 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 Research Affiliates and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Research Affiliates Deletions and iShares Trust , you can compare the effects of market volatilities on Research Affiliates 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 Research Affiliates with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Research Affiliates and IShares Trust.
Diversification Opportunities for Research Affiliates and IShares Trust
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Research and IShares is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Research Affiliates Deletions and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Research Affiliates 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 Research Affiliates Deletions 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 Research Affiliates i.e., Research Affiliates and IShares Trust go up and down completely randomly.
Pair Corralation between Research Affiliates and IShares Trust
Given the investment horizon of 90 days Research Affiliates Deletions is expected to generate 1.26 times more return on investment than IShares Trust. However, Research Affiliates is 1.26 times more volatile than iShares Trust . It trades about 0.21 of its potential returns per unit of risk. iShares Trust is currently generating about 0.14 per unit of risk. If you would invest 2,619 in Research Affiliates Deletions on August 28, 2024 and sell it today you would earn a total of 166.00 from holding Research Affiliates Deletions or generate 6.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Research Affiliates Deletions vs. iShares Trust
Performance |
| Timeline |
| Research Affiliates |
| iShares Trust |
Research Affiliates and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Research Affiliates and IShares Trust
The main advantage of trading using opposite Research Affiliates and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Research Affiliates 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.| Research Affiliates vs. Cambria Micro And | Research Affiliates vs. Invesco Actively Managed | Research Affiliates vs. iShares Trust | Research Affiliates vs. EMCS |
| IShares Trust vs. Cambria Micro And | IShares Trust vs. Invesco Actively Managed | IShares Trust vs. EMCS | IShares Trust vs. Research Affiliates Deletions |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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