Correlation Between IShares Trust and Kava

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

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

Diversification Opportunities for IShares Trust and Kava

-0.64

Correlation Coefficient

IShares Trust  Kava

Excellent diversification

The 3 months correlation between IShares and Kava is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Kava in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kava 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 Kava. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kava has no effect on the direction of IShares Trust i.e., IShares Trust and Kava go up and down completely randomly.

Pair Corralation between IShares Trust and Kava

Given the investment horizon of 90 days iShares Trust is expected to generate 0.04 times more return on investment than Kava. However, iShares Trust is 22.41 times less risky than Kava. It trades about 0.31 of its potential returns per unit of risk. Kava is currently generating about -0.05 per unit of risk. If you would invest  2,475  in iShares Trust on May 5, 2025 and sell it today you would earn a total of  75.00  from holding iShares Trust or generate 3.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

iShares Trust   vs.  Kava

iShares Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, IShares Trust is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kava

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kava has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Kava shareholders.

Pair Trading with IShares Trust and Kava

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

The idea behind iShares Trust and Kava 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.