Correlation Between IShares Expanded and IShares Semiconductor

Can any of the company-specific risk be diversified away by investing in both IShares Expanded and IShares Semiconductor 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 IShares Semiconductor 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 iShares Semiconductor ETF, you can compare the effects of market volatilities on IShares Expanded and IShares Semiconductor 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 IShares Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Expanded and IShares Semiconductor.

Diversification Opportunities for IShares Expanded and IShares Semiconductor

0.96

Correlation Coefficient

IShares Expanded  IShares Semiconductor

Almost no diversification

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

Pair Corralation between IShares Expanded and IShares Semiconductor

Considering the 90-day investment horizon IShares Expanded is expected to generate 2.04 times less return on investment than IShares Semiconductor. But when comparing it to its historical volatility, iShares Expanded Tech Software is 1.48 times less risky than IShares Semiconductor. It trades about 0.17 of its potential returns per unit of risk. iShares Semiconductor ETF is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  18,962  in iShares Semiconductor ETF on May 7, 2025 and sell it today you would earn a total of  5,078  from holding iShares Semiconductor ETF or generate 26.78% 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.  iShares Semiconductor ETF

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 abnormal technical and fundamental indicators, IShares Expanded may actually be approaching a critical reversion point that can send shares even higher in September 2025.

iShares Semiconductor ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Semiconductor ETF are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, IShares Semiconductor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Expanded and IShares Semiconductor

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

The idea behind iShares Expanded Tech Software and iShares Semiconductor ETF 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.