Correlation Between IShares Expanded and AOT Growth

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

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

Diversification Opportunities for IShares Expanded and AOT Growth

0.96

Correlation Coefficient

IShares Expanded  AOT Growth

Almost no diversification

The 3 months correlation between IShares and AOT is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech Software and AOT Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOT Growth and IShares Expanded 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 Expanded Tech Software are associated (or correlated) with AOT Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOT Growth has no effect on the direction of IShares Expanded i.e., IShares Expanded and AOT Growth go up and down completely randomly.

Pair Corralation between IShares Expanded and AOT Growth

Considering the 90-day investment horizon IShares Expanded is expected to generate 1.87 times less return on investment than AOT Growth. But when comparing it to its historical volatility, iShares Expanded Tech Software is 1.1 times less risky than AOT Growth. It trades about 0.17 of its potential returns per unit of risk. AOT Growth and is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  4,178  in AOT Growth and on May 7, 2025 and sell it today you would earn a total of  993.00  from holding AOT Growth and or generate 23.77% return on investment over 90 days.

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

iShares Expanded Tech Software  vs.  AOT Growth and

iShares Expanded Tech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Expanded Tech Software are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical and fundamental indicators, IShares Expanded may actually be approaching a critical reversion point that can send shares even higher in September 2025.

AOT Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AOT Growth and are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, AOT Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Expanded and AOT Growth

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

The idea behind iShares Expanded Tech Software and AOT Growth and 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.