Correlation Between IShares SP and IShares Global
Can any of the company-specific risk be diversified away by investing in both IShares SP and IShares Global 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 SP and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 100 and iShares Global Healthcare, you can compare the effects of market volatilities on IShares SP and IShares Global 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 SP with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and IShares Global.
Diversification Opportunities for IShares SP and IShares Global
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and IShares is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 100 and iShares Global Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Healthcare and IShares SP 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 SP 100 are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Healthcare has no effect on the direction of IShares SP i.e., IShares SP and IShares Global go up and down completely randomly.
Pair Corralation between IShares SP and IShares Global
Considering the 90-day investment horizon iShares SP 100 is expected to under-perform the IShares Global. In addition to that, IShares SP is 1.08 times more volatile than iShares Global Healthcare. It trades about -0.05 of its total potential returns per unit of risk. iShares Global Healthcare is currently generating about 0.03 per unit of volatility. If you would invest 9,198 in iShares Global Healthcare on November 28, 2024 and sell it today you would earn a total of 33.00 from holding iShares Global Healthcare or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP 100 vs. iShares Global Healthcare
Performance |
| Timeline |
| iShares SP 100 |
| iShares Global Healthcare |
IShares SP and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and IShares Global
The main advantage of trading using opposite IShares SP and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| IShares SP vs. iShares Russell 1000 | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares Russell 3000 | IShares SP vs. iShares SP Mid Cap |
| IShares Global vs. iShares Global Financials | IShares Global vs. iShares Global Tech | IShares Global vs. iShares Global Comm | IShares Global vs. iShares Healthcare ETF |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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