Correlation Between IShares Broad and IShares Core
Can any of the company-specific risk be diversified away by investing in both IShares Broad 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 IShares Broad and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Broad USD and iShares Core SP, you can compare the effects of market volatilities on IShares Broad 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 IShares Broad with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Broad and IShares Core.
Diversification Opportunities for IShares Broad and IShares Core
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares Broad USD 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 IShares Broad 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 Broad USD 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 IShares Broad i.e., IShares Broad and IShares Core go up and down completely randomly.
Pair Corralation between IShares Broad and IShares Core
Given the investment horizon of 90 days IShares Broad is expected to generate 2.59 times less return on investment than IShares Core. But when comparing it to its historical volatility, iShares Broad USD is 3.14 times less risky than IShares Core. It trades about 0.21 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 9,350 in iShares Core SP on September 2, 2024 and sell it today you would earn a total of 652.00 from holding iShares Core SP or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Broad USD vs. iShares Core SP
Performance |
| Timeline |
| iShares Broad USD |
| iShares Core SP |
IShares Broad and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Broad and IShares Core
The main advantage of trading using opposite IShares Broad and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Broad 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.| IShares Broad vs. Xtrackers USD High | IShares Broad vs. iShares 0 5 Year | IShares Broad vs. iShares Broad USD | IShares Broad vs. Global X Preferred |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |