Correlation Between IShares VII and Ishares II
Can any of the company-specific risk be diversified away by investing in both IShares VII and Ishares II 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 VII and Ishares II into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares VII PLC and Ishares II PLC, you can compare the effects of market volatilities on IShares VII and Ishares II 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 VII with a short position of Ishares II. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and Ishares II.
Diversification Opportunities for IShares VII and Ishares II
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Ishares is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and Ishares II PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares II PLC and IShares VII 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 VII PLC are associated (or correlated) with Ishares II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares II PLC has no effect on the direction of IShares VII i.e., IShares VII and Ishares II go up and down completely randomly.
Pair Corralation between IShares VII and Ishares II
Assuming the 90 days trading horizon iShares VII PLC is expected to generate 3.87 times more return on investment than Ishares II. However, IShares VII is 3.87 times more volatile than Ishares II PLC. It trades about 0.08 of its potential returns per unit of risk. Ishares II PLC is currently generating about 0.03 per unit of risk. If you would invest 23,420 in iShares VII PLC on September 12, 2024 and sell it today you would earn a total of 1,310 from holding iShares VII PLC or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.31% |
| Values | Daily Returns |
iShares VII PLC vs. Ishares II PLC
Performance |
| Timeline |
| iShares VII PLC |
| Ishares II PLC |
IShares VII and Ishares II Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares VII and Ishares II
The main advantage of trading using opposite IShares VII and Ishares II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII position performs unexpectedly, Ishares II 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 II will offset losses from the drop in Ishares II's long position.| IShares VII vs. iShares Govt Bond | IShares VII vs. iShares Global AAA AA | IShares VII vs. iShares Smart City | IShares VII vs. iShares Broad High |
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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 Stocks Directory module to find actively traded stocks across global markets.
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