Correlation Between IShares Core and Roundhill ETF
Can any of the company-specific risk be diversified away by investing in both IShares Core and Roundhill 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 Core and Roundhill ETF 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 Roundhill ETF Trust, you can compare the effects of market volatilities on IShares Core and Roundhill 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 Core with a short position of Roundhill ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Roundhill ETF.
Diversification Opportunities for IShares Core and Roundhill ETF
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Roundhill is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Roundhill ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill ETF 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 Roundhill ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill ETF Trust has no effect on the direction of IShares Core i.e., IShares Core and Roundhill ETF go up and down completely randomly.
Pair Corralation between IShares Core and Roundhill ETF
Considering the 90-day investment horizon IShares Core is expected to generate 1.06 times less return on investment than Roundhill ETF. In addition to that, IShares Core is 1.08 times more volatile than Roundhill ETF Trust. It trades about 0.14 of its total potential returns per unit of risk. Roundhill ETF Trust is currently generating about 0.16 per unit of volatility. If you would invest 4,570 in Roundhill ETF Trust on September 1, 2024 and sell it today you would earn a total of 736.00 from holding Roundhill ETF Trust or generate 16.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares Core SP vs. Roundhill ETF Trust
Performance |
| Timeline |
| iShares Core SP |
| Roundhill ETF Trust |
IShares Core and Roundhill ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Roundhill ETF
The main advantage of trading using opposite IShares Core and Roundhill ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Roundhill 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 Roundhill ETF will offset losses from the drop in Roundhill ETF'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 |
| Roundhill ETF vs. Vanguard Total Stock | Roundhill ETF vs. SPDR SP 500 | Roundhill ETF vs. iShares Core SP | Roundhill ETF vs. Vanguard Dividend Appreciation |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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