Correlation Between IShares Flexible and IShares Fundamental
Can any of the company-specific risk be diversified away by investing in both IShares Flexible and IShares Fundamental 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 Flexible and IShares Fundamental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Flexible Monthly and iShares Fundamental Hedged, you can compare the effects of market volatilities on IShares Flexible and IShares Fundamental 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 Flexible with a short position of IShares Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Flexible and IShares Fundamental.
Diversification Opportunities for IShares Flexible and IShares Fundamental
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Flexible Monthly and iShares Fundamental Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Fundamental and IShares Flexible 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 Flexible Monthly are associated (or correlated) with IShares Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Fundamental has no effect on the direction of IShares Flexible i.e., IShares Flexible and IShares Fundamental go up and down completely randomly.
Pair Corralation between IShares Flexible and IShares Fundamental
Assuming the 90 days trading horizon IShares Flexible is expected to generate 6.49 times less return on investment than IShares Fundamental. But when comparing it to its historical volatility, iShares Flexible Monthly is 5.15 times less risky than IShares Fundamental. It trades about 0.22 of its potential returns per unit of risk. iShares Fundamental Hedged is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 5,355 in iShares Fundamental Hedged on October 20, 2024 and sell it today you would earn a total of 207.00 from holding iShares Fundamental Hedged or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Flexible Monthly vs. iShares Fundamental Hedged
Performance |
| Timeline |
| iShares Flexible Monthly |
| iShares Fundamental |
IShares Flexible and IShares Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Flexible and IShares Fundamental
The main advantage of trading using opposite IShares Flexible and IShares Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Flexible position performs unexpectedly, IShares Fundamental 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 Fundamental will offset losses from the drop in IShares Fundamental's long position.| IShares Flexible vs. BMO Mid Term IG | IShares Flexible vs. Purpose Bitcoin CAD | IShares Flexible vs. Evolve E Gaming Index | IShares Flexible vs. iShares Canadian Select |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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