Correlation Between IShares Trust and ETRACS Monthly
Can any of the company-specific risk be diversified away by investing in both IShares Trust and ETRACS Monthly 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 Trust and ETRACS Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and ETRACS Monthly Pay, you can compare the effects of market volatilities on IShares Trust and ETRACS Monthly 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 Trust with a short position of ETRACS Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and ETRACS Monthly.
Diversification Opportunities for IShares Trust and ETRACS Monthly
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and ETRACS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and ETRACS Monthly Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS Monthly Pay and IShares Trust 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 Trust are associated (or correlated) with ETRACS Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS Monthly Pay has no effect on the direction of IShares Trust i.e., IShares Trust and ETRACS Monthly go up and down completely randomly.
Pair Corralation between IShares Trust and ETRACS Monthly
Given the investment horizon of 90 days IShares Trust is expected to generate 7.64 times less return on investment than ETRACS Monthly. But when comparing it to its historical volatility, iShares Trust is 7.83 times less risky than ETRACS Monthly. It trades about 0.29 of its potential returns per unit of risk. ETRACS Monthly Pay is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,901 in ETRACS Monthly Pay on October 20, 2024 and sell it today you would earn a total of 97.00 from holding ETRACS Monthly Pay or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. ETRACS Monthly Pay
Performance |
| Timeline |
| iShares Trust |
| ETRACS Monthly Pay |
IShares Trust and ETRACS Monthly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and ETRACS Monthly
The main advantage of trading using opposite IShares Trust and ETRACS Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, ETRACS Monthly 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 ETRACS Monthly will offset losses from the drop in ETRACS Monthly's long position.| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. Simplify Volatility Premium | IShares Trust vs. Tidal Trust II |
| ETRACS Monthly vs. ETRACS Quarterly Pay | ETRACS Monthly vs. Simplify Volatility Premium | ETRACS Monthly vs. ETRACS Monthly Pay | ETRACS Monthly vs. iShares Trust |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Stocks Directory Find actively traded stocks across global markets |