Correlation Between Industrial Select and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both Industrial Select and IShares Consumer 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 Industrial Select and IShares Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Select Sector and iShares Consumer Staples, you can compare the effects of market volatilities on Industrial Select and IShares Consumer 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 Industrial Select with a short position of IShares Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Select and IShares Consumer.
Diversification Opportunities for Industrial Select and IShares Consumer
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and IShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Select Sector and iShares Consumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Staples and Industrial 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 Industrial Select Sector are associated (or correlated) with IShares Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Staples has no effect on the direction of Industrial Select i.e., Industrial Select and IShares Consumer go up and down completely randomly.
Pair Corralation between Industrial Select and IShares Consumer
Considering the 90-day investment horizon Industrial Select Sector is expected to generate 1.98 times more return on investment than IShares Consumer. However, Industrial Select is 1.98 times more volatile than iShares Consumer Staples. It trades about 0.31 of its potential returns per unit of risk. iShares Consumer Staples is currently generating about 0.31 per unit of risk. If you would invest 13,401 in Industrial Select Sector on September 2, 2024 and sell it today you would earn a total of 998.00 from holding Industrial Select Sector or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Select Sector vs. iShares Consumer Staples
Performance |
| Timeline |
| Industrial Select Sector |
| iShares Consumer Staples |
Industrial Select and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Select and IShares Consumer
The main advantage of trading using opposite Industrial Select and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Select position performs unexpectedly, IShares Consumer 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 Consumer will offset losses from the drop in IShares Consumer's long position.| Industrial Select vs. Materials Select Sector | Industrial Select vs. Consumer Discretionary Select | Industrial Select vs. Consumer Staples Select | Industrial Select vs. Health Care Select |
| IShares Consumer vs. iShares Consumer Discretionary | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Utilities ETF | IShares Consumer vs. iShares Basic Materials |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |