Correlation Between Consumer Staples and IShares Home
Can any of the company-specific risk be diversified away by investing in both Consumer Staples and IShares Home 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 Consumer Staples and IShares Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Staples Select and iShares Home Construction, you can compare the effects of market volatilities on Consumer Staples and IShares Home 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 Consumer Staples with a short position of IShares Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Staples and IShares Home.
Diversification Opportunities for Consumer Staples and IShares Home
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Consumer and IShares is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Staples Select and iShares Home Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Home Construction and Consumer Staples 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 Consumer Staples Select are associated (or correlated) with IShares Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Home Construction has no effect on the direction of Consumer Staples i.e., Consumer Staples and IShares Home go up and down completely randomly.
Pair Corralation between Consumer Staples and IShares Home
Considering the 90-day investment horizon Consumer Staples Select is expected to generate 0.45 times more return on investment than IShares Home. However, Consumer Staples Select is 2.2 times less risky than IShares Home. It trades about 0.13 of its potential returns per unit of risk. iShares Home Construction is currently generating about -0.03 per unit of risk. If you would invest 7,588 in Consumer Staples Select on March 4, 2024 and sell it today you would earn a total of 146.00 from holding Consumer Staples Select or generate 1.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Consumer Staples Select vs. iShares Home Construction
Performance |
Timeline |
Consumer Staples Select |
iShares Home Construction |
Consumer Staples and IShares Home Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Consumer Staples and IShares Home
The main advantage of trading using opposite Consumer Staples and IShares Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Staples position performs unexpectedly, IShares Home 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 Home will offset losses from the drop in IShares Home's long position.Consumer Staples vs. Invesco DWA Consumer | Consumer Staples vs. Invesco DWA Basic | Consumer Staples vs. Invesco DWA Industrials | Consumer Staples vs. Invesco DWA Utilities |
IShares Home vs. Vanguard Consumer Staples | IShares Home vs. Vanguard Industrials Index | IShares Home vs. Vanguard Communication Services | IShares Home vs. Vanguard Materials Index |
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.
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