Correlation Between IShares Core and IncomeShares Apple

Can any of the company-specific risk be diversified away by investing in both IShares Core and IncomeShares Apple 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 IncomeShares Apple 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 IncomeShares Apple Options, you can compare the effects of market volatilities on IShares Core and IncomeShares Apple 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 IncomeShares Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IncomeShares Apple.

Diversification Opportunities for IShares Core and IncomeShares Apple

-0.58

Correlation Coefficient

IShares Core  IncomeShares Apple

Excellent diversification

The 3 months correlation between IShares and IncomeShares is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and IncomeShares Apple Options in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IncomeShares Apple 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 IncomeShares Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IncomeShares Apple has no effect on the direction of IShares Core i.e., IShares Core and IncomeShares Apple go up and down completely randomly.

Pair Corralation between IShares Core and IncomeShares Apple

Assuming the 90 days trading horizon IShares Core is expected to generate 2.72 times less return on investment than IncomeShares Apple. In addition to that, IShares Core is 1.25 times more volatile than IncomeShares Apple Options. It trades about 0.21 of its total potential returns per unit of risk. IncomeShares Apple Options is currently generating about 0.69 per unit of volatility. If you would invest  938.00  in IncomeShares Apple Options on September 28, 2024 and sell it today you would earn a total of  135.00  from holding IncomeShares Apple Options or generate 14.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	45.16%
Values	Daily Returns

iShares Core SP  vs.  IncomeShares Apple Options

iShares Core SP

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IncomeShares Apple

Risk-Adjusted Performance

54 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in IncomeShares Apple Options are ranked lower than 54 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, IncomeShares Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and IncomeShares Apple

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

The idea behind iShares Core SP and IncomeShares Apple Options 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.