Correlation Between IShares Core and Spinnaker ETF

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

By analyzing existing cross correlation between iShares Core Conservative and Spinnaker ETF Series, you can compare the effects of market volatilities on IShares Core and Spinnaker ETF 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 Core with a short position of Spinnaker ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Spinnaker ETF.

Diversification Opportunities for IShares Core and Spinnaker ETF

0.67

Correlation Coefficient

IShares Core  Spinnaker ETF

Poor diversification

The 3 months correlation between IShares and Spinnaker is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Conservative and Spinnaker ETF Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spinnaker ETF Series and IShares 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 iShares Core Conservative are associated (or correlated) with Spinnaker ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spinnaker ETF Series has no effect on the direction of IShares Core i.e., IShares Core and Spinnaker ETF go up and down completely randomly.

Pair Corralation between IShares Core and Spinnaker ETF

Considering the 90-day investment horizon IShares Core is expected to generate 2.23 times less return on investment than Spinnaker ETF. But when comparing it to its historical volatility, iShares Core Conservative is 1.02 times less risky than Spinnaker ETF. It trades about 0.04 of its potential returns per unit of risk. Spinnaker ETF Series is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  922.00  in Spinnaker ETF Series on August 30, 2024 and sell it today you would earn a total of  15.00  from holding Spinnaker ETF Series or generate 1.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

iShares Core Conservative  vs.  Spinnaker ETF Series

iShares Core Conservative

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days iShares Core Conservative has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, IShares Core is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Spinnaker ETF Series

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spinnaker ETF Series are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Spinnaker ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and Spinnaker ETF

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

The idea behind iShares Core Conservative and Spinnaker ETF Series 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.