Correlation Between IShares Core and OShares Small
Can any of the company-specific risk be diversified away by investing in both IShares Core and OShares Small 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 OShares Small 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 OShares Small Cap Quality, you can compare the effects of market volatilities on IShares Core and OShares Small 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 OShares Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and OShares Small.
Diversification Opportunities for IShares Core and OShares Small
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and OShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and OShares Small Cap Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OShares Small Cap 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 OShares Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OShares Small Cap has no effect on the direction of IShares Core i.e., IShares Core and OShares Small go up and down completely randomly.
Pair Corralation between IShares Core and OShares Small
Considering the 90-day investment horizon iShares Core SP is expected to generate 1.47 times more return on investment than OShares Small. However, IShares Core is 1.47 times more volatile than OShares Small Cap Quality. It trades about 0.2 of its potential returns per unit of risk. OShares Small Cap Quality is currently generating about 0.13 per unit of risk. If you would invest 11,466 in iShares Core SP on August 24, 2024 and sell it today you would earn a total of 832.00 from holding iShares Core SP or generate 7.26% 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 SP vs. OShares Small Cap Quality
Performance |
| Timeline |
| iShares Core SP |
| OShares Small Cap |
IShares Core and OShares Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and OShares Small
The main advantage of trading using opposite IShares Core and OShares Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, OShares Small 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 OShares Small will offset losses from the drop in OShares Small's long position.| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP Small Cap | IShares Core vs. iShares SP 500 |
| OShares Small vs. OShares Quality Dividend | OShares Small vs. OShares Europe Quality | OShares Small vs. OShares Global Internet | OShares Small vs. ProShares SP MidCap |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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