Correlation Between IShares Core and HANetf ICAV

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

Diversification Opportunities for IShares Core and HANetf ICAV

0.95

Correlation Coefficient

IShares Core  HANetf ICAV

Almost no diversification

The 3 months correlation between IShares and HANetf is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and HANetf ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANetf ICAV 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 HANetf ICAV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANetf ICAV has no effect on the direction of IShares Core i.e., IShares Core and HANetf ICAV go up and down completely randomly.

Pair Corralation between IShares Core and HANetf ICAV

Assuming the 90 days trading horizon IShares Core is expected to generate 1.55 times less return on investment than HANetf ICAV. But when comparing it to its historical volatility, iShares Core SP is 1.91 times less risky than HANetf ICAV. It trades about 0.2 of its potential returns per unit of risk. HANetf ICAV is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,195  in HANetf ICAV on September 25, 2024 and sell it today you would earn a total of  213.00  from holding HANetf ICAV or generate 17.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

iShares Core SP  vs.  HANetf ICAV

iShares Core SP

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 15 (%) 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.

HANetf ICAV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HANetf ICAV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, HANetf ICAV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and HANetf ICAV

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

The idea behind iShares Core SP and HANetf ICAV 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.