Correlation Between IShares Short and Health Care
Can any of the company-specific risk be diversified away by investing in both IShares Short and Health Care 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 Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Short Maturity and Health Care Select, you can compare the effects of market volatilities on IShares Short and Health Care 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 Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and Health Care.
Diversification Opportunities for IShares Short and Health Care
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Health is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Maturity and Health Care Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Select 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 Maturity are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Select has no effect on the direction of IShares Short i.e., IShares Short and Health Care go up and down completely randomly.
Pair Corralation between IShares Short and Health Care
Given the investment horizon of 90 days iShares Short Maturity is expected to generate 0.16 times more return on investment than Health Care. However, iShares Short Maturity is 6.4 times less risky than Health Care. It trades about -0.08 of its potential returns per unit of risk. Health Care Select is currently generating about -0.17 per unit of risk. If you would invest 5,019 in iShares Short Maturity on January 25, 2024 and sell it today you would lose (11.00) from holding iShares Short Maturity or give up 0.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Short Maturity vs. Health Care Select
Performance |
Timeline |
iShares Short Maturity |
Health Care Select |
IShares Short and Health Care Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Short and Health Care
The main advantage of trading using opposite IShares Short and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.IShares Short vs. iShares ESG 1 5 | IShares Short vs. First Trust Low | IShares Short vs. First Trust Managed | IShares Short vs. First Trust Senior |
Health Care vs. iShares Insurance ETF | Health Care vs. SCOR PK | Health Care vs. Morningstar Unconstrained Allocation | Health Care vs. SPACE |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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