Correlation Between IShares Core and BlackRock ETF

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

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

Diversification Opportunities for IShares Core and BlackRock ETF

0.92

Correlation Coefficient

IShares Core  BlackRock ETF

Almost no diversification

The 3 months correlation between IShares and BlackRock is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Dividend and BlackRock ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock ETF Trust 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 Dividend are associated (or correlated) with BlackRock ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock ETF Trust has no effect on the direction of IShares Core i.e., IShares Core and BlackRock ETF go up and down completely randomly.

Pair Corralation between IShares Core and BlackRock ETF

Given the investment horizon of 90 days IShares Core is expected to generate 5.71 times less return on investment than BlackRock ETF. But when comparing it to its historical volatility, iShares Core Dividend is 1.05 times less risky than BlackRock ETF. It trades about 0.01 of its potential returns per unit of risk. BlackRock ETF Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,133  in BlackRock ETF Trust on December 30, 2024 and sell it today you would earn a total of  89.00  from holding BlackRock ETF Trust or generate 2.84% return on investment over 90 days.

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

iShares Core Dividend  vs.  BlackRock ETF Trust

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.

BlackRock ETF Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ETF Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, BlackRock ETF is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Core and BlackRock ETF

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

The idea behind iShares Core Dividend and BlackRock ETF 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.