Correlation Between DSJA and IShares III

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

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

Diversification Opportunities for DSJA and IShares III

0.82

Correlation Coefficient

DSJA  IShares III

Very poor diversification

The 3 months correlation between DSJA and IShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding DSJA and IShares III Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares III Public and DSJA 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 DSJA are associated (or correlated) with IShares III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares III Public has no effect on the direction of DSJA i.e., DSJA and IShares III go up and down completely randomly.

Pair Corralation between DSJA and IShares III

If you would invest  492.00  in IShares III Public on September 17, 2024 and sell it today you would earn a total of  0.00  from holding IShares III Public or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

DSJA  vs.  IShares III Public

DSJA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSJA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, DSJA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

IShares III Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IShares III Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, IShares III is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DSJA and IShares III

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

The idea behind DSJA and IShares III Public 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.