Correlation Between BlackRock ETF and IShares Factors

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

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

Diversification Opportunities for BlackRock ETF and IShares Factors

0.41

Correlation Coefficient

BlackRock ETF  IShares Factors

Very weak diversification

The 3 months correlation between BlackRock and IShares is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ETF Trust and iShares Factors Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Factors Growth and BlackRock ETF 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 BlackRock ETF Trust are associated (or correlated) with IShares Factors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Factors Growth has no effect on the direction of BlackRock ETF i.e., BlackRock ETF and IShares Factors go up and down completely randomly.

Pair Corralation between BlackRock ETF and IShares Factors

Given the investment horizon of 90 days BlackRock ETF is expected to generate 1.04 times less return on investment than IShares Factors. But when comparing it to its historical volatility, BlackRock ETF Trust is 1.48 times less risky than IShares Factors. It trades about 0.2 of its potential returns per unit of risk. iShares Factors Growth is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5,330  in iShares Factors Growth on September 24, 2024 and sell it today you would earn a total of  404.00  from holding iShares Factors Growth or generate 7.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	24.53%
Values	Daily Returns

BlackRock ETF Trust  vs.  iShares Factors Growth

BlackRock ETF Trust

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days BlackRock ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile technical indicators, BlackRock ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares Factors Growth

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days iShares Factors Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly abnormal essential indicators, IShares Factors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BlackRock ETF and IShares Factors

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

The idea behind BlackRock ETF Trust and iShares Factors Growth 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.