Correlation Between ETRACS 2xMonthly and IShares Core
Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly and IShares Core 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 ETRACS 2xMonthly and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS 2xMonthly Pay and iShares Core SP, you can compare the effects of market volatilities on ETRACS 2xMonthly and IShares Core 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 ETRACS 2xMonthly with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and IShares Core.
Diversification Opportunities for ETRACS 2xMonthly and IShares Core
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ETRACS and IShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of ETRACS 2xMonthly i.e., ETRACS 2xMonthly and IShares Core go up and down completely randomly.
Pair Corralation between ETRACS 2xMonthly and IShares Core
Given the investment horizon of 90 days ETRACS 2xMonthly Pay is expected to under-perform the IShares Core. In addition to that, ETRACS 2xMonthly is 1.55 times more volatile than iShares Core SP. It trades about -0.17 of its total potential returns per unit of risk. iShares Core SP is currently generating about -0.24 per unit of volatility. If you would invest 9,716 in iShares Core SP on September 18, 2024 and sell it today you would lose (259.00) from holding iShares Core SP or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS 2xMonthly Pay vs. iShares Core SP
Performance |
| Timeline |
| ETRACS 2xMonthly Pay |
| iShares Core SP |
ETRACS 2xMonthly and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS 2xMonthly and IShares Core
The main advantage of trading using opposite ETRACS 2xMonthly and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| ETRACS 2xMonthly vs. ProShares UltraShort Yen | ETRACS 2xMonthly vs. ProShares Ultra Telecommunications | ETRACS 2xMonthly vs. ProShares Ultra Consumer | ETRACS 2xMonthly vs. ProShares Ultra Consumer |
| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares Broad USD | IShares Core vs. iShares Core SP |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |