Correlation Between IShares Core and Strategy Shares
Can any of the company-specific risk be diversified away by investing in both IShares Core and Strategy Shares 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 Strategy Shares 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 Strategy Shares Nasdaq, you can compare the effects of market volatilities on IShares Core and Strategy Shares 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 Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Strategy Shares.
Diversification Opportunities for IShares Core and Strategy Shares
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Strategy is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Moderate and Strategy Shares Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares Nasdaq 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 Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares Nasdaq has no effect on the direction of IShares Core i.e., IShares Core and Strategy Shares go up and down completely randomly.
Pair Corralation between IShares Core and Strategy Shares
Considering the 90-day investment horizon IShares Core is expected to generate 1.81 times less return on investment than Strategy Shares. But when comparing it to its historical volatility, iShares Core Moderate is 1.35 times less risky than Strategy Shares. It trades about 0.13 of its potential returns per unit of risk. Strategy Shares Nasdaq is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,002 in Strategy Shares Nasdaq on September 1, 2024 and sell it today you would earn a total of 238.00 from holding Strategy Shares Nasdaq or generate 11.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares Core Moderate vs. Strategy Shares Nasdaq
Performance |
| Timeline |
| iShares Core Moderate |
| Strategy Shares Nasdaq |
IShares Core and Strategy Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Strategy Shares
The main advantage of trading using opposite IShares Core and Strategy Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Strategy Shares 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 Strategy Shares will offset losses from the drop in Strategy Shares' long position.| IShares Core vs. iShares Core Conservative | IShares Core vs. iShares Core Growth | IShares Core vs. iShares Core Aggressive | IShares Core vs. Vanguard Mega Cap |
| Strategy Shares vs. NEOS ETF Trust | Strategy Shares vs. First Trust Multi Asset | Strategy Shares vs. Amplify High Income | Strategy Shares 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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