Correlation Between Real Estate and IShares Core
Can any of the company-specific risk be diversified away by investing in both Real Estate 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 Real Estate and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Real Estate and iShares Core REIT, you can compare the effects of market volatilities on Real Estate 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 Real Estate with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Estate and IShares Core.
Diversification Opportunities for Real Estate and IShares Core
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Real and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding The Real Estate and iShares Core REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core REIT and Real Estate 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 The Real Estate 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 REIT has no effect on the direction of Real Estate i.e., Real Estate and IShares Core go up and down completely randomly.
Pair Corralation between Real Estate and IShares Core
Given the investment horizon of 90 days Real Estate is expected to generate 1.1 times less return on investment than IShares Core. In addition to that, Real Estate is 1.01 times more volatile than iShares Core REIT. It trades about 0.05 of its total potential returns per unit of risk. iShares Core REIT is currently generating about 0.05 per unit of volatility. If you would invest 4,797 in iShares Core REIT on August 28, 2024 and sell it today you would earn a total of 1,406 from holding iShares Core REIT or generate 29.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Real Estate vs. iShares Core REIT
Performance |
| Timeline |
| Real Estate |
| iShares Core REIT |
Real Estate and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Estate and IShares Core
The main advantage of trading using opposite Real Estate and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate 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.The idea behind The Real Estate and iShares Core REIT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares Core vs. Vanguard Real Estate | IShares Core vs. Howard Hughes | IShares Core vs. Site Centers Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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