Correlation Between IShares Core and National Security

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

By analyzing existing cross correlation between iShares Core MSCI and National Security Emerging, you can compare the effects of market volatilities on IShares Core and National Security 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 National Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and National Security.

Diversification Opportunities for IShares Core and National Security

0.92

Correlation Coefficient

IShares Core  National Security

Almost no diversification

The 3 months correlation between IShares and National is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and National Security Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Security 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 MSCI are associated (or correlated) with National Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Security has no effect on the direction of IShares Core i.e., IShares Core and National Security go up and down completely randomly.

Pair Corralation between IShares Core and National Security

Given the investment horizon of 90 days iShares Core MSCI is expected to under-perform the National Security. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core MSCI is 1.02 times less risky than National Security. The etf trades about 0.0 of its potential returns per unit of risk. The National Security Emerging is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,658  in National Security Emerging on August 30, 2024 and sell it today you would lose (7.00) from holding National Security Emerging or give up 0.26% of portfolio value over 90 days.

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

iShares Core MSCI  vs.  National Security Emerging

iShares Core MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

National Security

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Security Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, National Security is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares Core and National Security

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

The idea behind iShares Core MSCI and National Security Emerging 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.