Correlation Between IShares Trust and Moneda Deuda

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

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

Diversification Opportunities for IShares Trust and Moneda Deuda

0.87

Correlation Coefficient

IShares Trust  Moneda Deuda

Very poor diversification

The 3 months correlation between IShares and Moneda is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Moneda Deuda Latinoamericana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moneda Deuda Latinoa and IShares Trust 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 Trust are associated (or correlated) with Moneda Deuda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moneda Deuda Latinoa has no effect on the direction of IShares Trust i.e., IShares Trust and Moneda Deuda go up and down completely randomly.

Pair Corralation between IShares Trust and Moneda Deuda

Assuming the 90 days trading horizon IShares Trust is expected to generate 11.27 times less return on investment than Moneda Deuda. But when comparing it to its historical volatility, iShares Trust is 32.03 times less risky than Moneda Deuda. It trades about 0.14 of its potential returns per unit of risk. Moneda Deuda Latinoamericana is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  15,303  in Moneda Deuda Latinoamericana on September 14, 2024 and sell it today you would earn a total of  18,540,497  from holding Moneda Deuda Latinoamericana or generate 121155.96% return on investment over 90 days.

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

iShares Trust   vs.  Moneda Deuda Latinoamericana

iShares Trust

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, IShares Trust unveiled solid returns over the last few months and may actually be approaching a breakup point.

Moneda Deuda Latinoa

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Moneda Deuda Latinoamericana are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, Moneda Deuda disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Trust and Moneda Deuda

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

The idea behind iShares Trust and Moneda Deuda Latinoamericana 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.