Correlation Between IShares Core and RPAR Risk

Can any of the company-specific risk be diversified away by investing in both IShares Core and RPAR Risk 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 Core and RPAR Risk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Core Growth and RPAR Risk Parity, you can compare the effects of market volatilities on IShares Core and RPAR Risk 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 Core with a short position of RPAR Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and RPAR Risk.

Diversification Opportunities for IShares Core and RPAR Risk

0.3

Correlation Coefficient

IShares Core  RPAR Risk

Weak diversification

The 3 months correlation between IShares and RPAR is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Growth and RPAR Risk Parity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPAR Risk Parity and IShares Core 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 Core Growth are associated (or correlated) with RPAR Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPAR Risk Parity has no effect on the direction of IShares Core i.e., IShares Core and RPAR Risk go up and down completely randomly.

Pair Corralation between IShares Core and RPAR Risk

Considering the 90-day investment horizon iShares Core Growth is expected to generate 0.67 times more return on investment than RPAR Risk. However, iShares Core Growth is 1.49 times less risky than RPAR Risk. It trades about 0.13 of its potential returns per unit of risk. RPAR Risk Parity is currently generating about 0.0 per unit of risk. If you would invest  5,734  in iShares Core Growth on September 4, 2024 and sell it today you would earn a total of  198.00  from holding iShares Core Growth or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

iShares Core Growth  vs.  RPAR Risk Parity

iShares Core Growth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Growth are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

RPAR Risk Parity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RPAR Risk Parity has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, RPAR Risk is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Core and RPAR Risk

The main advantage of trading using opposite IShares Core and RPAR Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, RPAR Risk 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 RPAR Risk will offset losses from the drop in RPAR Risk's long position.

The idea behind iShares Core Growth and RPAR Risk Parity 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.