Correlation Between Investment Managers and IShares Core

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

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

Diversification Opportunities for Investment Managers and IShares Core

0.87

Correlation Coefficient

Investment Managers  IShares Core

Very poor diversification

The 3 months correlation between Investment and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Investment Managers Series and iShares Core Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Aggressive and Investment Managers 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 Investment Managers Series 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 Aggressive has no effect on the direction of Investment Managers i.e., Investment Managers and IShares Core go up and down completely randomly.

Pair Corralation between Investment Managers and IShares Core

Considering the 90-day investment horizon Investment Managers Series is expected to generate 1.3 times more return on investment than IShares Core. However, Investment Managers is 1.3 times more volatile than iShares Core Aggressive. It trades about 0.13 of its potential returns per unit of risk. iShares Core Aggressive is currently generating about 0.14 per unit of risk. If you would invest  1,491  in Investment Managers Series on September 1, 2024 and sell it today you would earn a total of  84.00  from holding Investment Managers Series or generate 5.63% return on investment over 90 days.

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

Investment Managers Series  vs.  iShares Core Aggressive

Investment Managers

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investment Managers Series are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Investment Managers is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

iShares Core Aggressive

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Aggressive are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Investment Managers and IShares Core

The main advantage of trading using opposite Investment Managers and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment Managers 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 Investment Managers Series and iShares Core Aggressive 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.