Correlation Between IShares Currency and Thor Industries
Can any of the company-specific risk be diversified away by investing in both IShares Currency and Thor Industries 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 Currency and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Currency Hedged and Thor Industries, you can compare the effects of market volatilities on IShares Currency and Thor Industries 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 Currency with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Currency and Thor Industries.
Diversification Opportunities for IShares Currency and Thor Industries
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Thor is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding iShares Currency Hedged and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and IShares Currency 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 Currency Hedged are associated (or correlated) with Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of IShares Currency i.e., IShares Currency and Thor Industries go up and down completely randomly.
Pair Corralation between IShares Currency and Thor Industries
Given the investment horizon of 90 days iShares Currency Hedged is expected to generate 0.3 times more return on investment than Thor Industries. However, iShares Currency Hedged is 3.35 times less risky than Thor Industries. It trades about 0.01 of its potential returns per unit of risk. Thor Industries is currently generating about -0.11 per unit of risk. If you would invest 3,636 in iShares Currency Hedged on January 25, 2024 and sell it today you would earn a total of 6.00 from holding iShares Currency Hedged or generate 0.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Currency Hedged vs. Thor Industries
Performance |
Timeline |
iShares Currency Hedged |
Thor Industries |
IShares Currency and Thor Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Currency and Thor Industries
The main advantage of trading using opposite IShares Currency and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Currency position performs unexpectedly, Thor Industries 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 Thor Industries will offset losses from the drop in Thor Industries' long position.IShares Currency vs. First Trust RiverFront | IShares Currency vs. First Trust RiverFront | IShares Currency vs. First Trust Emerging |
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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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