Correlation Between IShares Core and Hoya Capital

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

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

Diversification Opportunities for IShares Core and Hoya Capital

0.71

Correlation Coefficient

IShares Core  Hoya Capital

Poor diversification

The 3 months correlation between IShares and Hoya is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core REIT and Hoya Capital High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoya Capital High 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 REIT are associated (or correlated) with Hoya Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoya Capital High has no effect on the direction of IShares Core i.e., IShares Core and Hoya Capital go up and down completely randomly.

Pair Corralation between IShares Core and Hoya Capital

Given the investment horizon of 90 days iShares Core REIT is expected to generate 1.09 times more return on investment than Hoya Capital. However, IShares Core is 1.09 times more volatile than Hoya Capital High. It trades about 0.08 of its potential returns per unit of risk. Hoya Capital High is currently generating about 0.04 per unit of risk. If you would invest  5,991  in iShares Core REIT on September 2, 2024 and sell it today you would earn a total of  255.00  from holding iShares Core REIT or generate 4.26% return on investment over 90 days.

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

iShares Core REIT  vs.  Hoya Capital High

iShares Core REIT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hoya Capital High

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hoya Capital High are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Hoya Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Core and Hoya Capital

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

The idea behind iShares Core REIT and Hoya Capital High 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.