Correlation Between IShares SP and AlphaMark Actively

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

By analyzing existing cross correlation between iShares SP 500 and AlphaMark Actively Managed, you can compare the effects of market volatilities on IShares SP and AlphaMark Actively 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 SP with a short position of AlphaMark Actively. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and AlphaMark Actively.

Diversification Opportunities for IShares SP and AlphaMark Actively

0.78

Correlation Coefficient

IShares SP  AlphaMark Actively

Poor diversification

The 3 months correlation between IShares and AlphaMark is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and AlphaMark Actively Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaMark Actively and IShares SP 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 SP 500 are associated (or correlated) with AlphaMark Actively. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaMark Actively has no effect on the direction of IShares SP i.e., IShares SP and AlphaMark Actively go up and down completely randomly.

Pair Corralation between IShares SP and AlphaMark Actively

Considering the 90-day investment horizon iShares SP 500 is expected to under-perform the AlphaMark Actively. But the etf apears to be less risky and, when comparing its historical volatility, iShares SP 500 is 1.95 times less risky than AlphaMark Actively. The etf trades about -0.04 of its potential returns per unit of risk. The AlphaMark Actively Managed is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,288  in AlphaMark Actively Managed on September 22, 2024 and sell it today you would lose (21.00) from holding AlphaMark Actively Managed or give up 0.64% of portfolio value over 90 days.

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

iShares SP 500  vs.  AlphaMark Actively Managed

iShares SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IShares SP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

AlphaMark Actively

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AlphaMark Actively Managed has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, AlphaMark Actively is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares SP and AlphaMark Actively

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

The idea behind iShares SP 500 and AlphaMark Actively Managed 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.