Correlation Between IShares Factors and IShares

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

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

Diversification Opportunities for IShares Factors and IShares

-0.4

Correlation Coefficient

IShares Factors  IShares

Very good diversification

The 3 months correlation between IShares and IShares is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding iShares Factors Growth and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares and IShares Factors 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 Factors Growth are associated (or correlated) with IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of IShares Factors i.e., IShares Factors and IShares go up and down completely randomly.

Pair Corralation between IShares Factors and IShares

If you would invest  5,489  in iShares Factors Growth on September 20, 2024 and sell it today you would earn a total of  245.00  from holding iShares Factors Growth or generate 4.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	7.69%
Values	Daily Returns

iShares Factors Growth  vs.  IShares

iShares Factors Growth

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days iShares Factors Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly abnormal essential indicators, IShares Factors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, IShares is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Factors and IShares

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

The idea behind iShares Factors Growth and IShares 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.