Correlation Between IShares Core and Volatility Shares
Can any of the company-specific risk be diversified away by investing in both IShares Core and Volatility Shares 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 Volatility Shares 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 Volatility Shares Trust, you can compare the effects of market volatilities on IShares Core and Volatility Shares 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 Volatility Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Volatility Shares.
Diversification Opportunities for IShares Core and Volatility Shares
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Volatility is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Volatility Shares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volatility Shares 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 SP are associated (or correlated) with Volatility Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volatility Shares Trust has no effect on the direction of IShares Core i.e., IShares Core and Volatility Shares go up and down completely randomly.
Pair Corralation between IShares Core and Volatility Shares
Considering the 90-day investment horizon iShares Core SP is expected to generate 0.18 times more return on investment than Volatility Shares. However, iShares Core SP is 5.45 times less risky than Volatility Shares. It trades about 0.15 of its potential returns per unit of risk. Volatility Shares Trust is currently generating about -0.22 per unit of risk. If you would invest 60,026 in iShares Core SP on November 18, 2024 and sell it today you would earn a total of 1,242 from holding iShares Core SP or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. Volatility Shares Trust
Performance |
| Timeline |
| iShares Core SP |
| Volatility Shares Trust |
IShares Core and Volatility Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Volatility Shares
The main advantage of trading using opposite IShares Core and Volatility Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Volatility Shares 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 Volatility Shares will offset losses from the drop in Volatility Shares' long position.| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP 500 | IShares Core vs. iShares Russell 2000 |
| Volatility Shares vs. Grayscale Funds Trust | Volatility Shares vs. ProShares Trust | Volatility Shares vs. iShares Ethereum Trust | Volatility Shares vs. ProShares Trust |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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