Correlation Between Ishares Trust and MASSACHUSETTS

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

By analyzing existing cross correlation between Ishares Trust and MASSACHUSETTS INST TECHNOLOGY, you can compare the effects of market volatilities on Ishares Trust and MASSACHUSETTS 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 Trust with a short position of MASSACHUSETTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Trust and MASSACHUSETTS.

Diversification Opportunities for Ishares Trust and MASSACHUSETTS

-0.5

Correlation Coefficient

Ishares Trust  MASSACHUSETTS

Very good diversification

The 3 months correlation between Ishares and MASSACHUSETTS is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Trust and MASSACHUSETTS INST TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASSACHUSETTS INST and Ishares Trust 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 Trust are associated (or correlated) with MASSACHUSETTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASSACHUSETTS INST has no effect on the direction of Ishares Trust i.e., Ishares Trust and MASSACHUSETTS go up and down completely randomly.

Pair Corralation between Ishares Trust and MASSACHUSETTS

Given the investment horizon of 90 days Ishares Trust is expected to generate 0.58 times more return on investment than MASSACHUSETTS. However, Ishares Trust is 1.72 times less risky than MASSACHUSETTS. It trades about 0.1 of its potential returns per unit of risk. MASSACHUSETTS INST TECHNOLOGY is currently generating about 0.02 per unit of risk. If you would invest  3,086  in Ishares Trust on September 25, 2024 and sell it today you would earn a total of  228.00  from holding Ishares Trust or generate 7.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Ishares Trust   vs.  MASSACHUSETTS INST TECHNOLOGY

Ishares Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Ishares Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MASSACHUSETTS INST

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MASSACHUSETTS INST TECHNOLOGY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MASSACHUSETTS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ishares Trust and MASSACHUSETTS

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

The idea behind Ishares Trust and MASSACHUSETTS INST TECHNOLOGY 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.