Correlation Between IShares SPTSX and Blockchain Technologies
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX and Blockchain Technologies 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 SPTSX and Blockchain Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SPTSX Capped and Blockchain Technologies ETF, you can compare the effects of market volatilities on IShares SPTSX and Blockchain Technologies 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 SPTSX with a short position of Blockchain Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Blockchain Technologies.
Diversification Opportunities for IShares SPTSX and Blockchain Technologies
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Blockchain is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and Blockchain Technologies ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blockchain Technologies and IShares SPTSX 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 SPTSX Capped are associated (or correlated) with Blockchain Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blockchain Technologies has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Blockchain Technologies go up and down completely randomly.
Pair Corralation between IShares SPTSX and Blockchain Technologies
Assuming the 90 days trading horizon IShares SPTSX is expected to generate 14.93 times less return on investment than Blockchain Technologies. But when comparing it to its historical volatility, iShares SPTSX Capped is 5.95 times less risky than Blockchain Technologies. It trades about 0.07 of its potential returns per unit of risk. Blockchain Technologies ETF is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,765 in Blockchain Technologies ETF on August 28, 2024 and sell it today you would earn a total of 291.00 from holding Blockchain Technologies ETF or generate 16.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares SPTSX Capped vs. Blockchain Technologies ETF
Performance |
| Timeline |
| iShares SPTSX Capped |
| Blockchain Technologies |
IShares SPTSX and Blockchain Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and Blockchain Technologies
The main advantage of trading using opposite IShares SPTSX and Blockchain Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX position performs unexpectedly, Blockchain Technologies 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 Blockchain Technologies will offset losses from the drop in Blockchain Technologies' long position.| IShares SPTSX vs. BMO Equal Weight | IShares SPTSX vs. BMO SPTSX Equal | IShares SPTSX vs. BMO Equal Weight |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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