Correlation Between IShares Trust and SHP ETF
Can any of the company-specific risk be diversified away by investing in both IShares Trust and SHP 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 Trust and SHP ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and SHP ETF Trust, you can compare the effects of market volatilities on IShares Trust and SHP 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 Trust with a short position of SHP ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and SHP ETF.
Diversification Opportunities for IShares Trust and SHP ETF
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and SHP is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF 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 SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of IShares Trust i.e., IShares Trust and SHP ETF go up and down completely randomly.
Pair Corralation between IShares Trust and SHP ETF
Given the investment horizon of 90 days IShares Trust is expected to generate 1.72 times less return on investment than SHP ETF. But when comparing it to its historical volatility, iShares Trust is 1.04 times less risky than SHP ETF. It trades about 0.12 of its potential returns per unit of risk. SHP ETF Trust is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,082 in SHP ETF Trust on August 29, 2024 and sell it today you would earn a total of 133.00 from holding SHP ETF Trust or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. SHP ETF Trust
Performance |
| Timeline |
| iShares Trust |
| SHP ETF Trust |
IShares Trust and SHP ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and SHP ETF
The main advantage of trading using opposite IShares Trust and SHP ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, SHP 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 SHP ETF will offset losses from the drop in SHP ETF's long position.| IShares Trust vs. First Trust Multi Asset | IShares Trust vs. Collaborative Investment Series | IShares Trust vs. Akros Monthly Payout | IShares Trust vs. Northern Lights |
| SHP ETF vs. Global X SP | SHP ETF vs. Amplify CWP Enhanced | SHP ETF vs. Global X Russell | SHP ETF vs. JPMorgan Nasdaq Equity |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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