Correlation Between IShares Short and IShares Conservative

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

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

Diversification Opportunities for IShares Short and IShares Conservative

0.68

Correlation Coefficient

IShares Short  IShares Conservative

Poor diversification

The 3 months correlation between IShares and IShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Term and iShares Conservative Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Conservative and IShares Short 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 Short Term are associated (or correlated) with IShares Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Conservative has no effect on the direction of IShares Short i.e., IShares Short and IShares Conservative go up and down completely randomly.

Pair Corralation between IShares Short and IShares Conservative

Assuming the 90 days trading horizon iShares Short Term is expected to generate 0.72 times more return on investment than IShares Conservative. However, iShares Short Term is 1.39 times less risky than IShares Conservative. It trades about 0.1 of its potential returns per unit of risk. iShares Conservative Strategic is currently generating about 0.05 per unit of risk. If you would invest  1,703  in iShares Short Term on September 5, 2024 and sell it today you would earn a total of  21.00  from holding iShares Short Term or generate 1.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

iShares Short Term  vs.  iShares Conservative Strategic

iShares Short Term

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Short Term are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, IShares Short is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares Conservative

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Conservative Strategic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IShares Conservative is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Short and IShares Conservative

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

The idea behind iShares Short Term and iShares Conservative Strategic 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.