Correlation Between EGSHARES BLUE and IShares Trust

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

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

Diversification Opportunities for EGSHARES BLUE and IShares Trust

0.65

Correlation Coefficient

EGSHARES BLUE  IShares Trust

Poor diversification

The 3 months correlation between EGSHARES and IShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding EGSHARES BLUE CHIP and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and EGSHARES BLUE 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 EGSHARES BLUE CHIP are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of EGSHARES BLUE i.e., EGSHARES BLUE and IShares Trust go up and down completely randomly.

Pair Corralation between EGSHARES BLUE and IShares Trust

Given the investment horizon of 90 days EGSHARES BLUE CHIP is expected to under-perform the IShares Trust. In addition to that, EGSHARES BLUE is 2.2 times more volatile than iShares Trust. It trades about -0.04 of its total potential returns per unit of risk. iShares Trust is currently generating about 0.01 per unit of volatility. If you would invest  3,141  in iShares Trust on December 29, 2024 and sell it today you would earn a total of  13.00  from holding iShares Trust or generate 0.41% return on investment over 90 days.

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

EGSHARES BLUE CHIP  vs.  iShares Trust

EGSHARES BLUE CHIP

Risk-Adjusted Performance

Very Weak

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

iShares Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, IShares Trust is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with EGSHARES BLUE and IShares Trust

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

The idea behind EGSHARES BLUE CHIP and iShares Trust 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.