Correlation Between IShares Core and NuShares ETF

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Can any of the company-specific risk be diversified away by investing in both IShares Core and NuShares ETF 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 NuShares ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core 1 5 and NuShares ETF Trust, you can compare the effects of market volatilities on IShares Core and NuShares ETF 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 NuShares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and NuShares ETF.

Diversification Opportunities for IShares Core and NuShares ETF

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between IShares and NuShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core 1 5 and NuShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuShares ETF Trust 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 1 5 are associated (or correlated) with NuShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuShares ETF Trust has no effect on the direction of IShares Core i.e., IShares Core and NuShares ETF go up and down completely randomly.

Pair Corralation between IShares Core and NuShares ETF

Given the investment horizon of 90 days iShares Core 1 5 is expected to generate 0.15 times more return on investment than NuShares ETF. However, iShares Core 1 5 is 6.55 times less risky than NuShares ETF. It trades about 0.21 of its potential returns per unit of risk. NuShares ETF Trust is currently generating about 0.02 per unit of risk. If you would invest  4,625  in iShares Core 1 5 on September 5, 2024 and sell it today you would earn a total of  175.00  from holding iShares Core 1 5 or generate 3.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

iShares Core 1 5  vs.  NuShares ETF Trust

 Performance 
       Timeline  
iShares Core 1 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core 1 5 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
NuShares ETF Trust 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NuShares ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, NuShares ETF is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

IShares Core and NuShares ETF Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares Core and NuShares ETF

The main advantage of trading using opposite IShares Core and NuShares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, NuShares ETF 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 NuShares ETF will offset losses from the drop in NuShares ETF's long position.
The idea behind iShares Core 1 5 and NuShares ETF Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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