Correlation Between IShares II and IShares Core
Can any of the company-specific risk be diversified away by investing in both IShares II 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 II 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 II Public and iShares Core FTSE, you can compare the effects of market volatilities on IShares II 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 II with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares II and IShares Core.
Diversification Opportunities for IShares II and IShares Core
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares II Public and iShares Core FTSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core FTSE and IShares II 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 II Public 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 FTSE has no effect on the direction of IShares II i.e., IShares II and IShares Core go up and down completely randomly.
Pair Corralation between IShares II and IShares Core
Assuming the 90 days trading horizon iShares II Public is expected to under-perform the IShares Core. In addition to that, IShares II is 1.31 times more volatile than iShares Core FTSE. It trades about -0.03 of its total potential returns per unit of risk. iShares Core FTSE is currently generating about 0.05 per unit of volatility. If you would invest 931.00 in iShares Core FTSE on September 1, 2024 and sell it today you would earn a total of 43.00 from holding iShares Core FTSE or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
iShares II Public vs. iShares Core FTSE
Performance |
| Timeline |
| iShares II Public |
| iShares Core FTSE |
IShares II and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares II and IShares Core
The main advantage of trading using opposite IShares II and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares II 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 II vs. iShares Core MSCI | IShares II vs. BlackRock ESG Multi Asset | IShares II vs. Pershing Square Holdings | IShares II vs. ASML Holding NV |
| IShares Core vs. iShares Core MSCI | IShares Core vs. BlackRock ESG Multi Asset | IShares Core vs. Pershing Square Holdings | IShares Core vs. ASML Holding NV |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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