Correlation Between IShares 1 and IShares Core
Can any of the company-specific risk be diversified away by investing in both IShares 1 and IShares Core 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 1 and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 1 10Yr Laddered and iShares Core Canadian, you can compare the effects of market volatilities on IShares 1 and IShares Core 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 1 with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and IShares Core.
Diversification Opportunities for IShares 1 and IShares Core
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 10Yr Laddered and iShares Core Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Canadian and IShares 1 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 1 10Yr Laddered are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Canadian has no effect on the direction of IShares 1 i.e., IShares 1 and IShares Core go up and down completely randomly.
Pair Corralation between IShares 1 and IShares Core
Assuming the 90 days trading horizon IShares 1 is expected to generate 1.26 times less return on investment than IShares Core. But when comparing it to its historical volatility, iShares 1 10Yr Laddered is 1.33 times less risky than IShares Core. It trades about 0.2 of its potential returns per unit of risk. iShares Core Canadian is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,004 in iShares Core Canadian on September 13, 2024 and sell it today you would earn a total of 31.00 from holding iShares Core Canadian or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 1 10Yr Laddered vs. iShares Core Canadian
Performance |
| Timeline |
| iShares 1 10Yr |
| iShares Core Canadian |
IShares 1 and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 1 and IShares Core
The main advantage of trading using opposite IShares 1 and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| IShares 1 vs. iShares Core Canadian | IShares 1 vs. iShares Core Canadian | IShares 1 vs. iShares Canadian Real | IShares 1 vs. iShares Canadian Value |
| IShares Core vs. BMO Mid Corporate | IShares Core vs. Global X Active | IShares Core vs. iShares 1 10Yr Laddered | IShares Core vs. RBC Target 2026 |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |