Correlation Between IShares Core and IShares Trust
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares Trust 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 IShares Trust 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 iShares Trust , you can compare the effects of market volatilities on IShares Core and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares Trust.
Diversification Opportunities for IShares Core and IShares Trust
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of IShares Core i.e., IShares Core and IShares Trust go up and down completely randomly.
Pair Corralation between IShares Core and IShares Trust
Considering the 90-day investment horizon iShares Core SP is expected to generate 3.71 times more return on investment than IShares Trust. However, IShares Core is 3.71 times more volatile than iShares Trust . It trades about 0.15 of its potential returns per unit of risk. iShares Trust is currently generating about 0.11 per unit of risk. If you would invest 58,203 in iShares Core SP on August 25, 2024 and sell it today you would earn a total of 1,642 from holding iShares Core SP or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. iShares Trust
Performance |
| Timeline |
| iShares Core SP |
| iShares Trust |
IShares Core and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares Trust
The main advantage of trading using opposite IShares Core and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's 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 |
| IShares Trust vs. First Trust Senior | IShares Trust vs. First Trust Low | IShares Trust vs. First Trust Enhanced | IShares Trust vs. First Trust TCW |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |