Correlation Between IShares Core and ETF Securities

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

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

Diversification Opportunities for IShares Core and ETF Securities

0.0

Correlation Coefficient

IShares Core  ETF Securities

Pay attention - limited upside

The 3 months correlation between IShares and ETF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and ETF Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Securities 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 SP are associated (or correlated) with ETF Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Securities has no effect on the direction of IShares Core i.e., IShares Core and ETF Securities go up and down completely randomly.

Pair Corralation between IShares Core and ETF Securities

If you would invest  57,035  in iShares Core SP on September 21, 2024 and sell it today you would earn a total of  2,418  from holding iShares Core SP or generate 4.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

iShares Core SP  vs.  ETF Securities

iShares Core SP

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ETF Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETF Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, ETF Securities is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Core and ETF Securities

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

The idea behind iShares Core SP and ETF Securities 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.