Correlation Between IShares SP and Africa Israel
Can any of the company-specific risk be diversified away by investing in both IShares SP and Africa Israel 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 SP and Africa Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and Africa Israel Residences, you can compare the effects of market volatilities on IShares SP and Africa Israel 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 SP with a short position of Africa Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Africa Israel.
Diversification Opportunities for IShares SP and Africa Israel
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Africa is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and Africa Israel Residences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Africa Israel Residences and IShares SP 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 SP 500 are associated (or correlated) with Africa Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Africa Israel Residences has no effect on the direction of IShares SP i.e., IShares SP and Africa Israel go up and down completely randomly.
Pair Corralation between IShares SP and Africa Israel
Considering the 90-day investment horizon iShares SP 500 is expected to generate 0.34 times more return on investment than Africa Israel. However, iShares SP 500 is 2.92 times less risky than Africa Israel. It trades about -0.24 of its potential returns per unit of risk. Africa Israel Residences is currently generating about -0.34 per unit of risk. If you would invest 8,483 in iShares SP 500 on January 20, 2024 and sell it today you would lose (371.00) from holding iShares SP 500 or give up 4.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.61% |
| Values | Daily Returns |
iShares SP 500 vs. Africa Israel Residences
Performance |
| Timeline |
| iShares SP 500 |
| Africa Israel Residences |
IShares SP and Africa Israel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and Africa Israel
The main advantage of trading using opposite IShares SP and Africa Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, Africa Israel 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 Africa Israel will offset losses from the drop in Africa Israel's long position.| IShares SP vs. Northern Lights | IShares SP vs. Dimensional International High | IShares SP vs. Matthews China Discovery | IShares SP vs. Davis Select International |
| Africa Israel vs. Migdal Insurance | Africa Israel vs. The Phoenix Holdings | Africa Israel vs. Harel Insurance Investments | Africa Israel vs. Clal Insurance Enterprises |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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