Correlation Between Absolute Core and IShares SP
Can any of the company-specific risk be diversified away by investing in both Absolute Core and IShares SP 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 Absolute Core and IShares SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Core Strategy and iShares SP 500, you can compare the effects of market volatilities on Absolute Core and IShares SP 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 Absolute Core with a short position of IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Core and IShares SP.
Diversification Opportunities for Absolute Core and IShares SP
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Absolute and IShares is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Core Strategy and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 and Absolute Core 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 Absolute Core Strategy are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of Absolute Core i.e., Absolute Core and IShares SP go up and down completely randomly.
Pair Corralation between Absolute Core and IShares SP
Given the investment horizon of 90 days Absolute Core Strategy is expected to under-perform the IShares SP. But the etf apears to be less risky and, when comparing its historical volatility, Absolute Core Strategy is 1.95 times less risky than IShares SP. The etf trades about -0.09 of its potential returns per unit of risk. The iShares SP 500 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 9,541 in iShares SP 500 on September 25, 2024 and sell it today you would earn a total of 843.00 from holding iShares SP 500 or generate 8.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Absolute Core Strategy vs. iShares SP 500
Performance |
Timeline |
Absolute Core Strategy |
iShares SP 500 |
Absolute Core and IShares SP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Absolute Core and IShares SP
The main advantage of trading using opposite Absolute Core and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Core position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's long position.Absolute Core vs. Salon City | Absolute Core vs. Northern Lights | Absolute Core vs. Sterling Capital Focus | Absolute Core vs. Aquagold International |
IShares SP vs. FT Vest Equity | IShares SP vs. Northern Lights | IShares SP vs. Dimensional International High | IShares SP vs. JPMorgan Fundamental Data |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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