Correlation Between Volatility Shares and IShares Core

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

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

Diversification Opportunities for Volatility Shares and IShares Core

-0.05

Correlation Coefficient

Volatility Shares  IShares Core

Good diversification

The 3 months correlation between Volatility and IShares is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and iShares Core Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Dividend and Volatility Shares 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 Volatility Shares Trust 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 Dividend has no effect on the direction of Volatility Shares i.e., Volatility Shares and IShares Core go up and down completely randomly.

Pair Corralation between Volatility Shares and IShares Core

Given the investment horizon of 90 days Volatility Shares Trust is expected to under-perform the IShares Core. In addition to that, Volatility Shares is 9.08 times more volatile than iShares Core Dividend. It trades about -0.08 of its total potential returns per unit of risk. iShares Core Dividend is currently generating about -0.04 per unit of volatility. If you would invest  6,437  in iShares Core Dividend on December 1, 2024 and sell it today you would lose (103.00) from holding iShares Core Dividend or give up 1.6% of portfolio value over 90 days.

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

Volatility Shares Trust  vs.  iShares Core Dividend

Volatility Shares Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volatility Shares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

iShares Core Dividend

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Volatility Shares and IShares Core

The main advantage of trading using opposite Volatility Shares and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares 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 Volatility Shares Trust and iShares Core Dividend 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..