Correlation Between IShares Core and BFIT
Can any of the company-specific risk be diversified away by investing in both IShares Core and BFIT 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 BFIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Moderate and BFIT, you can compare the effects of market volatilities on IShares Core and BFIT 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 BFIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and BFIT.
Diversification Opportunities for IShares Core and BFIT
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and BFIT is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Moderate and BFIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BFIT 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 Moderate are associated (or correlated) with BFIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BFIT has no effect on the direction of IShares Core i.e., IShares Core and BFIT go up and down completely randomly.
Pair Corralation between IShares Core and BFIT
Considering the 90-day investment horizon IShares Core is expected to generate 1.65 times less return on investment than BFIT. But when comparing it to its historical volatility, iShares Core Moderate is 2.64 times less risky than BFIT. It trades about 0.09 of its potential returns per unit of risk. BFIT is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,092 in BFIT on August 30, 2024 and sell it today you would earn a total of 193.00 from holding BFIT or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.31% |
| Values | Daily Returns |
iShares Core Moderate vs. BFIT
Performance |
| Timeline |
| iShares Core Moderate |
| BFIT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares Core and BFIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and BFIT
The main advantage of trading using opposite IShares Core and BFIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, BFIT 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 BFIT will offset losses from the drop in BFIT's long position.| IShares Core vs. NEOS ETF Trust | IShares Core vs. First Trust Multi Asset | IShares Core vs. Amplify High Income | IShares Core vs. Global X Russell |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |