Correlation Between IShares Trust and Listed Funds
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Listed Funds 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 Listed Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Listed Funds Trust, you can compare the effects of market volatilities on IShares Trust and Listed Funds 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 Listed Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Listed Funds.
Diversification Opportunities for IShares Trust and Listed Funds
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Listed is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds Trust 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 Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of IShares Trust i.e., IShares Trust and Listed Funds go up and down completely randomly.
Pair Corralation between IShares Trust and Listed Funds
Given the investment horizon of 90 days iShares Trust is expected to generate 0.97 times more return on investment than Listed Funds. However, iShares Trust is 1.03 times less risky than Listed Funds. It trades about 0.17 of its potential returns per unit of risk. Listed Funds Trust is currently generating about 0.1 per unit of risk. If you would invest 2,402 in iShares Trust on September 3, 2024 and sell it today you would earn a total of 788.00 from holding iShares Trust or generate 32.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 56.57% |
| Values | Daily Returns |
iShares Trust vs. Listed Funds Trust
Performance |
| Timeline |
| iShares Trust |
| Listed Funds Trust |
IShares Trust and Listed Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Listed Funds
The main advantage of trading using opposite IShares Trust and Listed Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Listed Funds 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 Listed Funds will offset losses from the drop in Listed Funds' long position.| IShares Trust vs. Humana Inc | IShares Trust vs. iPath Series B | IShares Trust vs. Global X Funds | IShares Trust vs. Ocean Park High |
| Listed Funds vs. Innovator ETFs Trust | Listed Funds vs. First Trust Cboe | Listed Funds vs. FT Cboe Vest | Listed Funds vs. Innovator SP 500 |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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