Correlation Between IShares Robotics and SPDR Kensho

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

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

Diversification Opportunities for IShares Robotics and SPDR Kensho

0.82

Correlation Coefficient

IShares Robotics  SPDR Kensho

Very poor diversification

The 3 months correlation between IShares and SPDR is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares Robotics and and SPDR Kensho New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho New and IShares Robotics 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 Robotics and are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho New has no effect on the direction of IShares Robotics i.e., IShares Robotics and SPDR Kensho go up and down completely randomly.

Pair Corralation between IShares Robotics and SPDR Kensho

Given the investment horizon of 90 days iShares Robotics and is expected to generate 1.01 times more return on investment than SPDR Kensho. However, IShares Robotics is 1.01 times more volatile than SPDR Kensho New. It trades about -0.02 of its potential returns per unit of risk. SPDR Kensho New is currently generating about -0.05 per unit of risk. If you would invest  3,435  in iShares Robotics and on February 27, 2024 and sell it today you would lose (38.00) from holding iShares Robotics and or give up 1.11% of portfolio value over 90 days.

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

iShares Robotics and  vs.  SPDR Kensho New

iShares Robotics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Robotics and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, IShares Robotics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

SPDR Kensho New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Kensho New has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, SPDR Kensho is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Robotics and SPDR Kensho

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

The idea behind iShares Robotics and and SPDR Kensho New 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.