Correlation Between Main International and IShares Breakthrough

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

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

Diversification Opportunities for Main International and IShares Breakthrough

0.78

Correlation Coefficient

Main International  IShares Breakthrough

Poor diversification

The 3 months correlation between Main and IShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Main International ETF and iShares Breakthrough Environme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Breakthrough and Main International 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 Main International ETF are associated (or correlated) with IShares Breakthrough. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Breakthrough has no effect on the direction of Main International i.e., Main International and IShares Breakthrough go up and down completely randomly.

Pair Corralation between Main International and IShares Breakthrough

Given the investment horizon of 90 days Main International ETF is expected to generate 0.52 times more return on investment than IShares Breakthrough. However, Main International ETF is 1.91 times less risky than IShares Breakthrough. It trades about -0.03 of its potential returns per unit of risk. iShares Breakthrough Environmental is currently generating about -0.03 per unit of risk. If you would invest  2,302  in Main International ETF on March 12, 2024 and sell it today you would lose (39.00) from holding Main International ETF or give up 1.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Main International ETF  vs.  iShares Breakthrough Environme

Main International ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Main International ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Main International is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

iShares Breakthrough

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Breakthrough Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, IShares Breakthrough is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Main International and IShares Breakthrough

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

The idea behind Main International ETF and iShares Breakthrough Environmental 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.