Correlation Between IShares Trust and ETRACS Monthly
Can any of the company-specific risk be diversified away by investing in both IShares Trust and ETRACS Monthly 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 Trust and ETRACS Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and ETRACS Monthly Pay, you can compare the effects of market volatilities on IShares Trust and ETRACS Monthly 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 Trust with a short position of ETRACS Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and ETRACS Monthly.
Diversification Opportunities for IShares Trust and ETRACS Monthly
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and ETRACS is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and ETRACS Monthly Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS Monthly Pay and IShares Trust 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 Trust are associated (or correlated) with ETRACS Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS Monthly Pay has no effect on the direction of IShares Trust i.e., IShares Trust and ETRACS Monthly go up and down completely randomly.
Pair Corralation between IShares Trust and ETRACS Monthly
Given the investment horizon of 90 days iShares Trust is expected to under-perform the ETRACS Monthly. But the etf apears to be less risky and, when comparing its historical volatility, iShares Trust is 1.26 times less risky than ETRACS Monthly. The etf trades about -0.19 of its potential returns per unit of risk. The ETRACS Monthly Pay is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,002 in ETRACS Monthly Pay on August 25, 2024 and sell it today you would earn a total of 20.00 from holding ETRACS Monthly Pay or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. ETRACS Monthly Pay
Performance |
| Timeline |
| iShares Trust |
| ETRACS Monthly Pay |
IShares Trust and ETRACS Monthly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and ETRACS Monthly
The main advantage of trading using opposite IShares Trust and ETRACS Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, ETRACS Monthly 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 ETRACS Monthly will offset losses from the drop in ETRACS Monthly's long position.| IShares Trust vs. iShares Treasury Floating | IShares Trust vs. iShares iBonds Dec | IShares Trust vs. iShares iBonds Dec | IShares Trust vs. iShares 0 3 Month |
| ETRACS Monthly vs. ProShares VIX Short Term | ETRACS Monthly vs. ProShares UltraShort Yen | ETRACS Monthly vs. iPath Series B |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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