Correlation Between IShares Core and Overlay Shares
Can any of the company-specific risk be diversified away by investing in both IShares Core and Overlay 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 Overlay 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 Overlay Shares Hedged, you can compare the effects of market volatilities on IShares Core and Overlay 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 Overlay Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Overlay Shares.
Diversification Opportunities for IShares Core and Overlay Shares
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Overlay is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Overlay Shares Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overlay Shares Hedged 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 Overlay Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overlay Shares Hedged has no effect on the direction of IShares Core i.e., IShares Core and Overlay Shares go up and down completely randomly.
Pair Corralation between IShares Core and Overlay Shares
Considering the 90-day investment horizon iShares Core SP is expected to generate 1.51 times more return on investment than Overlay Shares. However, IShares Core is 1.51 times more volatile than Overlay Shares Hedged. It trades about 0.07 of its potential returns per unit of risk. Overlay Shares Hedged is currently generating about 0.06 per unit of risk. If you would invest 56,258 in iShares Core SP on November 28, 2024 and sell it today you would earn a total of 3,450 from holding iShares Core SP or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. Overlay Shares Hedged
Performance |
| Timeline |
| iShares Core SP |
| Overlay Shares Hedged |
IShares Core and Overlay Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Overlay Shares
The main advantage of trading using opposite IShares Core and Overlay Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Overlay 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 Overlay Shares will offset losses from the drop in Overlay 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 |
| Overlay Shares vs. Listed Funds Trust | Overlay Shares vs. Overlay Shares Core | Overlay Shares vs. Overlay Shares Large | Overlay Shares vs. Overlay Shares Municipal |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |