Correlation Between IShares Core and Pershing Square
Can any of the company-specific risk be diversified away by investing in both IShares Core and Pershing Square 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 Pershing Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and Pershing Square Holdings, you can compare the effects of market volatilities on IShares Core and Pershing Square 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 Pershing Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Pershing Square.
Diversification Opportunities for IShares Core and Pershing Square
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Pershing is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Pershing Square Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pershing Square Holdings 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 SP are associated (or correlated) with Pershing Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pershing Square Holdings has no effect on the direction of IShares Core i.e., IShares Core and Pershing Square go up and down completely randomly.
Pair Corralation between IShares Core and Pershing Square
Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.61 times more return on investment than Pershing Square. However, iShares Core SP is 1.63 times less risky than Pershing Square. It trades about 0.16 of its potential returns per unit of risk. Pershing Square Holdings is currently generating about -0.05 per unit of risk. If you would invest 50,993 in iShares Core SP on August 30, 2024 and sell it today you would earn a total of 9,422 from holding iShares Core SP or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
iShares Core SP vs. Pershing Square Holdings
Performance |
| Timeline |
| iShares Core SP |
| Pershing Square Holdings |
IShares Core and Pershing Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Pershing Square
The main advantage of trading using opposite IShares Core and Pershing Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Pershing Square 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 Pershing Square will offset losses from the drop in Pershing Square's long position.| IShares Core vs. iShares III Public | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares France Govt | IShares Core vs. iShares Edge MSCI |
| Pershing Square vs. Apple Inc | Pershing Square vs. Microsoft | Pershing Square vs. Alphabet Inc Class C | Pershing Square vs. Meta Platforms |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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