Correlation Between IShares IShares and Select Sector

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

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

Diversification Opportunities for IShares IShares and Select Sector

0.0

Correlation Coefficient

IShares IShares  Select Sector

Pay attention - limited upside

The 3 months correlation between IShares and Select is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares iShares and The Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Sector and IShares IShares 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 iShares are associated (or correlated) with Select Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Sector has no effect on the direction of IShares IShares i.e., IShares IShares and Select Sector go up and down completely randomly.

Pair Corralation between IShares IShares and Select Sector

If you would invest  0.00  in iShares iShares on September 12, 2024 and sell it today you would earn a total of  0.00  from holding iShares iShares or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

iShares iShares  vs.  The Select Sector

iShares iShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares iShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, IShares IShares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Select Sector

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Select Sector are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Select Sector may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares IShares and Select Sector

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

The idea behind iShares iShares and The Select Sector 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.