Correlation Between IShares SP and IShares SP
Can any of the company-specific risk be diversified away by investing in both IShares SP and IShares SP 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 IShares SP 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 iShares SP Small Cap, you can compare the effects of market volatilities on IShares SP and IShares SP 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 IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and IShares SP.
Diversification Opportunities for IShares SP and IShares SP
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and iShares SP Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP Small 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 IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP Small has no effect on the direction of IShares SP i.e., IShares SP and IShares SP go up and down completely randomly.
Pair Corralation between IShares SP and IShares SP
Considering the 90-day investment horizon IShares SP is expected to generate 4.39 times less return on investment than IShares SP. But when comparing it to its historical volatility, iShares SP 500 is 1.51 times less risky than IShares SP. It trades about 0.09 of its potential returns per unit of risk. iShares SP Small Cap is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 10,757 in iShares SP Small Cap on August 28, 2024 and sell it today you would earn a total of 1,048 from holding iShares SP Small Cap or generate 9.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP 500 vs. iShares SP Small Cap
Performance |
| Timeline |
| iShares SP 500 |
| iShares SP Small |
IShares SP and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and IShares SP
The main advantage of trading using opposite IShares SP and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's 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 |
| IShares SP vs. iShares SP Small Cap | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares SP 500 |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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