Correlation Between IShares SP and Financial
Can any of the company-specific risk be diversified away by investing in both IShares SP and Financial 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 SP and Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP Mid Cap and Financial 15 Split, you can compare the effects of market volatilities on IShares SP and Financial 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 SP with a short position of Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Financial.
Diversification Opportunities for IShares SP and Financial
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Financial is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP Mid Cap and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split and IShares SP 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 SP Mid Cap are associated (or correlated) with Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of IShares SP i.e., IShares SP and Financial go up and down completely randomly.
Pair Corralation between IShares SP and Financial
Assuming the 90 days trading horizon IShares SP is expected to generate 1.64 times less return on investment than Financial. In addition to that, IShares SP is 1.07 times more volatile than Financial 15 Split. It trades about 0.36 of its total potential returns per unit of risk. Financial 15 Split is currently generating about 0.62 per unit of volatility. If you would invest 847.00 in Financial 15 Split on September 3, 2024 and sell it today you would earn a total of 144.00 from holding Financial 15 Split or generate 17.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP Mid Cap vs. Financial 15 Split
Performance |
| Timeline |
| iShares SP Mid |
| Financial 15 Split |
IShares SP and Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and Financial
The main advantage of trading using opposite IShares SP and Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, Financial 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 Financial will offset losses from the drop in Financial's long position.| IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares Small Cap | IShares SP vs. iShares SP Small Cap | IShares SP vs. iShares SPTSX Small |
| Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. North American Financial | Financial vs. Life Banc Split |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |