Correlation Between IShares Core and IShares SPASX
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares SPASX 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 IShares SPASX 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 iShares SPASX Small, you can compare the effects of market volatilities on IShares Core and IShares SPASX 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 IShares SPASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares SPASX.
Diversification Opportunities for IShares Core and IShares SPASX
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and iShares SPASX Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPASX Small 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 IShares SPASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPASX Small has no effect on the direction of IShares Core i.e., IShares Core and IShares SPASX go up and down completely randomly.
Pair Corralation between IShares Core and IShares SPASX
Assuming the 90 days trading horizon iShares Core SP is expected to generate 2.44 times more return on investment than IShares SPASX. However, IShares Core is 2.44 times more volatile than iShares SPASX Small. It trades about 0.3 of its potential returns per unit of risk. iShares SPASX Small is currently generating about 0.03 per unit of risk. If you would invest 17,507 in iShares Core SP on August 29, 2024 and sell it today you would earn a total of 2,045 from holding iShares Core SP or generate 11.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. iShares SPASX Small
Performance |
| Timeline |
| iShares Core SP |
| iShares SPASX Small |
IShares Core and IShares SPASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares SPASX
The main advantage of trading using opposite IShares Core and IShares SPASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares SPASX 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 SPASX will offset losses from the drop in IShares SPASX's long position.| IShares Core vs. iShares MSCI Emerging | IShares Core vs. iShares Global Aggregate | IShares Core vs. iShares CoreSP MidCap | IShares Core vs. iShares SP 500 |
| IShares SPASX vs. SPDR SP 500 | IShares SPASX vs. Vanguard Total Market | IShares SPASX vs. iShares Core SP | IShares SPASX vs. iShares Core SP |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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