Correlation Between IShares Global and Global Health
Can any of the company-specific risk be diversified away by investing in both IShares Global and Global Health 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 Global and Global Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Healthcare and Global Health, you can compare the effects of market volatilities on IShares Global and Global Health 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 Global with a short position of Global Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Global Health.
Diversification Opportunities for IShares Global and Global Health
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Global is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health and IShares Global 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 Global Healthcare are associated (or correlated) with Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health has no effect on the direction of IShares Global i.e., IShares Global and Global Health go up and down completely randomly.
Pair Corralation between IShares Global and Global Health
Assuming the 90 days trading horizon IShares Global is expected to generate 1.9 times less return on investment than Global Health. But when comparing it to its historical volatility, iShares Global Healthcare is 7.32 times less risky than Global Health. It trades about 0.04 of its potential returns per unit of risk. Global Health is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Global Health on September 24, 2024 and sell it today you would lose (7.00) from holding Global Health or give up 33.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Global Healthcare vs. Global Health
Performance |
Timeline |
iShares Global Healthcare |
Global Health |
IShares Global and Global Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Global and Global Health
The main advantage of trading using opposite IShares Global and Global Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, Global Health 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 Global Health will offset losses from the drop in Global Health's long position.IShares Global vs. BetaShares Global Banks | IShares Global vs. Beta Shares SPASX | IShares Global vs. Vanguard Australian Property | IShares Global vs. iShares SP 500 |
Global Health vs. Ecofibre | Global Health vs. iShares Global Healthcare | Global Health vs. Adriatic Metals Plc | Global Health vs. Australian Dairy Farms |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |