Correlation Between IShares Core and KFA Value
Can any of the company-specific risk be diversified away by investing in both IShares Core and KFA Value 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 KFA Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Dividend and KFA Value Line, you can compare the effects of market volatilities on IShares Core and KFA Value 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 KFA Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and KFA Value.
Diversification Opportunities for IShares Core and KFA Value
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and KFA is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Dividend and KFA Value Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KFA Value Line 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 Dividend are associated (or correlated) with KFA Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KFA Value Line has no effect on the direction of IShares Core i.e., IShares Core and KFA Value go up and down completely randomly.
Pair Corralation between IShares Core and KFA Value
Given the investment horizon of 90 days IShares Core is expected to generate 1.05 times less return on investment than KFA Value. In addition to that, IShares Core is 1.03 times more volatile than KFA Value Line. It trades about 0.33 of its total potential returns per unit of risk. KFA Value Line is currently generating about 0.35 per unit of volatility. If you would invest 2,675 in KFA Value Line on September 1, 2024 and sell it today you would earn a total of 136.00 from holding KFA Value Line or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Dividend vs. KFA Value Line
Performance |
| Timeline |
| iShares Core Dividend |
| KFA Value Line |
IShares Core and KFA Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and KFA Value
The main advantage of trading using opposite IShares Core and KFA Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, KFA Value 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 KFA Value will offset losses from the drop in KFA Value's long position.| IShares Core vs. iShares Core High | IShares Core vs. Schwab Dividend Equity | IShares Core vs. ProShares SP 500 | IShares Core vs. Invesco 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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