Correlation Between IShares Aerospace and IShares Expanded
Can any of the company-specific risk be diversified away by investing in both IShares Aerospace and IShares Expanded 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 Aerospace and IShares Expanded into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Aerospace Defense and iShares Expanded Tech Software, you can compare the effects of market volatilities on IShares Aerospace and IShares Expanded 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 Aerospace with a short position of IShares Expanded. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Aerospace and IShares Expanded.
Diversification Opportunities for IShares Aerospace and IShares Expanded
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Aerospace Defense and iShares Expanded Tech Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Expanded Tech and IShares Aerospace 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 Aerospace Defense are associated (or correlated) with IShares Expanded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Expanded Tech has no effect on the direction of IShares Aerospace i.e., IShares Aerospace and IShares Expanded go up and down completely randomly.
Pair Corralation between IShares Aerospace and IShares Expanded
Considering the 90-day investment horizon iShares Aerospace Defense is expected to generate 0.85 times more return on investment than IShares Expanded. However, iShares Aerospace Defense is 1.17 times less risky than IShares Expanded. It trades about 0.37 of its potential returns per unit of risk. iShares Expanded Tech Software is currently generating about 0.18 per unit of risk. If you would invest 16,016 in iShares Aerospace Defense on May 7, 2025 and sell it today you would earn a total of 3,775 from holding iShares Aerospace Defense or generate 23.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Aerospace Defense vs. iShares Expanded Tech Software
Performance |
Timeline |
iShares Aerospace Defense |
iShares Expanded Tech |
IShares Aerospace and IShares Expanded Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Aerospace and IShares Expanded
The main advantage of trading using opposite IShares Aerospace and IShares Expanded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Aerospace position performs unexpectedly, IShares Expanded 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 Expanded will offset losses from the drop in IShares Expanded's long position.IShares Aerospace vs. SPDR SP Aerospace | IShares Aerospace vs. Invesco Aerospace Defense | IShares Aerospace vs. iShares Medical Devices | IShares Aerospace vs. iShares Expanded Tech Software |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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