Correlation Between Strategy Shares and IShares Core

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

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

Diversification Opportunities for Strategy Shares and IShares Core

0.75

Correlation Coefficient

Strategy Shares  IShares Core

Poor diversification

The 3 months correlation between Strategy and IShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares Nasdaq and iShares Core Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Conservative and Strategy Shares 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 Strategy Shares Nasdaq are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Conservative has no effect on the direction of Strategy Shares i.e., Strategy Shares and IShares Core go up and down completely randomly.

Pair Corralation between Strategy Shares and IShares Core

Given the investment horizon of 90 days Strategy Shares Nasdaq is expected to generate 1.62 times more return on investment than IShares Core. However, Strategy Shares is 1.62 times more volatile than iShares Core Conservative. It trades about 0.14 of its potential returns per unit of risk. iShares Core Conservative is currently generating about 0.1 per unit of risk. If you would invest  2,143  in Strategy Shares Nasdaq on September 1, 2024 and sell it today you would earn a total of  97.00  from holding Strategy Shares Nasdaq or generate 4.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Strategy Shares Nasdaq  vs.  iShares Core Conservative

Strategy Shares Nasdaq

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares Nasdaq are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Strategy Shares is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

iShares Core Conservative

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Conservative are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Strategy Shares and IShares Core

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

The idea behind Strategy Shares Nasdaq and iShares Core Conservative 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.