Correlation Between Materials Select and IShares North
Can any of the company-specific risk be diversified away by investing in both Materials Select and IShares North 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 Materials Select and IShares North into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materials Select Sector and iShares North American, you can compare the effects of market volatilities on Materials Select and IShares North 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 Materials Select with a short position of IShares North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Select and IShares North.
Diversification Opportunities for Materials Select and IShares North
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Materials and IShares is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Materials Select Sector and iShares North American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares North American and Materials Select 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 Materials Select Sector are associated (or correlated) with IShares North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares North American has no effect on the direction of Materials Select i.e., Materials Select and IShares North go up and down completely randomly.
Pair Corralation between Materials Select and IShares North
Considering the 90-day investment horizon Materials Select is expected to generate 2.5 times less return on investment than IShares North. But when comparing it to its historical volatility, Materials Select Sector is 1.16 times less risky than IShares North. It trades about 0.07 of its potential returns per unit of risk. iShares North American is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,346 in iShares North American on September 2, 2024 and sell it today you would earn a total of 381.00 from holding iShares North American or generate 8.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materials Select Sector vs. iShares North American
Performance |
| Timeline |
| Materials Select Sector |
| iShares North American |
Materials Select and IShares North Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materials Select and IShares North
The main advantage of trading using opposite Materials Select and IShares North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Select position performs unexpectedly, IShares North 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 North will offset losses from the drop in IShares North's long position.| Materials Select vs. Industrial Select Sector | Materials Select vs. Consumer Discretionary Select | Materials Select vs. Consumer Staples Select | Materials Select vs. Utilities Select Sector |
| IShares North vs. iShares Energy ETF | IShares North vs. iShares Basic Materials | IShares North vs. iShares Global Energy | IShares North vs. iShares Cohen Steers |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |