Correlation Between IShares Smart and IShares Public

Can any of the company-specific risk be diversified away by investing in both IShares Smart and IShares Public 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 Smart and IShares Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Smart City and iShares Public Limited, you can compare the effects of market volatilities on IShares Smart and IShares Public 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 Smart with a short position of IShares Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Smart and IShares Public.

Diversification Opportunities for IShares Smart and IShares Public

0.14

Correlation Coefficient

IShares Smart  IShares Public

Average diversification

The 3 months correlation between IShares and IShares is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding iShares Smart City and iShares Public Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Public and IShares Smart 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 Smart City are associated (or correlated) with IShares Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Public has no effect on the direction of IShares Smart i.e., IShares Smart and IShares Public go up and down completely randomly.

Pair Corralation between IShares Smart and IShares Public

Assuming the 90 days trading horizon iShares Smart City is expected to generate 0.74 times more return on investment than IShares Public. However, iShares Smart City is 1.35 times less risky than IShares Public. It trades about 0.21 of its potential returns per unit of risk. iShares Public Limited is currently generating about 0.05 per unit of risk. If you would invest  686.00  in iShares Smart City on September 13, 2024 and sell it today you would earn a total of  79.00  from holding iShares Smart City or generate 11.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

iShares Smart City  vs.  iShares Public Limited

iShares Smart City

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Smart City are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, IShares Smart may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Public Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IShares Public is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Smart and IShares Public

The main advantage of trading using opposite IShares Smart and IShares Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Smart position performs unexpectedly, IShares Public 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 Public will offset losses from the drop in IShares Public's long position.

The idea behind iShares Smart City and iShares Public Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.