Correlation Between IShares Core and IShares SPASX
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares SPASX 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 IShares SPASX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Cash and iShares SPASX Small, you can compare the effects of market volatilities on IShares Core and IShares SPASX 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 IShares SPASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares SPASX.
Diversification Opportunities for IShares Core and IShares SPASX
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Cash and iShares SPASX Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPASX Small 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 Cash are associated (or correlated) with IShares SPASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPASX Small has no effect on the direction of IShares Core i.e., IShares Core and IShares SPASX go up and down completely randomly.
Pair Corralation between IShares Core and IShares SPASX
Assuming the 90 days trading horizon IShares Core is expected to generate 3.7 times less return on investment than IShares SPASX. But when comparing it to its historical volatility, iShares Core Cash is 26.96 times less risky than IShares SPASX. It trades about 0.6 of its potential returns per unit of risk. iShares SPASX Small is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 484.00 in iShares SPASX Small on September 1, 2024 and sell it today you would earn a total of 6.00 from holding iShares SPASX Small or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Cash vs. iShares SPASX Small
Performance |
| Timeline |
| iShares Core Cash |
| iShares SPASX Small |
IShares Core and IShares SPASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares SPASX
The main advantage of trading using opposite IShares Core and IShares SPASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares SPASX 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 IShares SPASX will offset losses from the drop in IShares SPASX's long position.| IShares Core vs. iShares MSCI Emerging | IShares Core vs. iShares Global Aggregate | IShares Core vs. iShares CoreSP MidCap | IShares Core vs. iShares SP 500 |
| IShares SPASX vs. iShares MSCI Emerging | IShares SPASX vs. iShares Global Aggregate | IShares SPASX vs. iShares CoreSP MidCap | IShares SPASX vs. iShares SP 500 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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