Correlation Between AMS Small and IShares Diversified

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

By analyzing existing cross correlation between AMS Small Cap and iShares Diversified Commodity, you can compare the effects of market volatilities on AMS Small and IShares Diversified 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 AMS Small with a short position of IShares Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMS Small and IShares Diversified.

Diversification Opportunities for AMS Small and IShares Diversified

0.0

Correlation Coefficient

AMS Small  IShares Diversified

Pay attention - limited upside

The 3 months correlation between AMS and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AMS Small Cap and iShares Diversified Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Diversified and AMS Small 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 AMS Small Cap are associated (or correlated) with IShares Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Diversified has no effect on the direction of AMS Small i.e., AMS Small and IShares Diversified go up and down completely randomly.

Pair Corralation between AMS Small and IShares Diversified

If you would invest  136,502  in AMS Small Cap on April 25, 2025 and sell it today you would earn a total of  14,408  from holding AMS Small Cap or generate 10.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AMS Small Cap  vs.  iShares Diversified Commodity

Pair Trading with AMS Small and IShares Diversified

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

The idea behind AMS Small Cap and iShares Diversified Commodity 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.