Correlation Between IShares Trust and Tech Mahindra

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

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

Diversification Opportunities for IShares Trust and Tech Mahindra

0.14

Correlation Coefficient

IShares Trust  Tech Mahindra

Average diversification

The 3 months correlation between IShares and Tech is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Tech Mahindra Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tech Mahindra Limited 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 Tech Mahindra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tech Mahindra Limited has no effect on the direction of IShares Trust i.e., IShares Trust and Tech Mahindra go up and down completely randomly.

Pair Corralation between IShares Trust and Tech Mahindra

Given the investment horizon of 90 days iShares Trust is expected to generate 0.11 times more return on investment than Tech Mahindra. However, iShares Trust is 8.88 times less risky than Tech Mahindra. It trades about 0.31 of its potential returns per unit of risk. Tech Mahindra Limited is currently generating about -0.02 per unit of risk. If you would invest  2,475  in iShares Trust on May 4, 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 Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

iShares Trust   vs.  Tech Mahindra Limited

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.

Tech Mahindra Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tech Mahindra Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Tech Mahindra is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Trust and Tech Mahindra

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

The idea behind iShares Trust and Tech Mahindra Limited 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.