Correlation Between IShares Small and American Sierra
Can any of the company-specific risk be diversified away by investing in both IShares Small and American Sierra 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 Small and American Sierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Small Cap and American Sierra Gold, you can compare the effects of market volatilities on IShares Small and American Sierra 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 Small with a short position of American Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Small and American Sierra.
Diversification Opportunities for IShares Small and American Sierra
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and American is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding iShares Small Cap and American Sierra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Sierra Gold and IShares Small 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 Small Cap are associated (or correlated) with American Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Sierra Gold has no effect on the direction of IShares Small i.e., IShares Small and American Sierra go up and down completely randomly.
Pair Corralation between IShares Small and American Sierra
Given the investment horizon of 90 days IShares Small is expected to generate 30.64 times less return on investment than American Sierra. But when comparing it to its historical volatility, iShares Small Cap is 19.7 times less risky than American Sierra. It trades about 0.06 of its potential returns per unit of risk. American Sierra Gold is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1.00 in American Sierra Gold on September 12, 2024 and sell it today you would lose (0.60) from holding American Sierra Gold or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Small Cap vs. American Sierra Gold
Performance |
| Timeline |
| iShares Small Cap |
| American Sierra Gold |
IShares Small and American Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Small and American Sierra
The main advantage of trading using opposite IShares Small and American Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Small position performs unexpectedly, American Sierra 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 American Sierra will offset losses from the drop in American Sierra's long position.| IShares Small vs. American Sierra Gold | IShares Small vs. American Century ETF | IShares Small vs. Avantis Emerging Markets | IShares Small vs. Avantis Emerging Markets |
| American Sierra vs. Arctic Star Exploration | American Sierra vs. American Clean Resources | American Sierra vs. American Creek Resources | American Sierra vs. Arras Minerals Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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