Correlation Between IShares SP and ERShares Entrepreneurs
Can any of the company-specific risk be diversified away by investing in both IShares SP and ERShares Entrepreneurs 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 SP and ERShares Entrepreneurs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and ERShares Entrepreneurs ETF, you can compare the effects of market volatilities on IShares SP and ERShares Entrepreneurs 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 SP with a short position of ERShares Entrepreneurs. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and ERShares Entrepreneurs.
Diversification Opportunities for IShares SP and ERShares Entrepreneurs
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and ERShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and ERShares Entrepreneurs ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERShares Entrepreneurs and IShares SP 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 SP 500 are associated (or correlated) with ERShares Entrepreneurs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERShares Entrepreneurs has no effect on the direction of IShares SP i.e., IShares SP and ERShares Entrepreneurs go up and down completely randomly.
Pair Corralation between IShares SP and ERShares Entrepreneurs
Considering the 90-day investment horizon IShares SP is expected to generate 1.07 times less return on investment than ERShares Entrepreneurs. But when comparing it to its historical volatility, iShares SP 500 is 1.41 times less risky than ERShares Entrepreneurs. It trades about 0.12 of its potential returns per unit of risk. ERShares Entrepreneurs ETF is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,070 in ERShares Entrepreneurs ETF on October 25, 2024 and sell it today you would earn a total of 767.00 from holding ERShares Entrepreneurs ETF or generate 71.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.16% |
| Values | Daily Returns |
iShares SP 500 vs. ERShares Entrepreneurs ETF
Performance |
| Timeline |
| iShares SP 500 |
| ERShares Entrepreneurs |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
IShares SP and ERShares Entrepreneurs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and ERShares Entrepreneurs
The main advantage of trading using opposite IShares SP and ERShares Entrepreneurs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, ERShares Entrepreneurs 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 ERShares Entrepreneurs will offset losses from the drop in ERShares Entrepreneurs' long position.| IShares SP vs. FT Vest Equity | IShares SP vs. Northern Lights | IShares SP vs. Dimensional International High | IShares SP vs. First Trust Exchange Traded |
| ERShares Entrepreneurs vs. East West Bancorp | ERShares Entrepreneurs vs. GSI Technology | ERShares Entrepreneurs vs. Amtech Systems | ERShares Entrepreneurs vs. Entegris |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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