Correlation Between Strategy Shares and IShares Trust

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

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

Diversification Opportunities for Strategy Shares and IShares Trust

-0.21

Correlation Coefficient

Strategy Shares  IShares Trust

Very good diversification

The 3 months correlation between Strategy and IShares is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Strategy 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 Strategy Shares 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 Strategy Shares i.e., Strategy Shares and IShares Trust go up and down completely randomly.

Pair Corralation between Strategy Shares and IShares Trust

Given the investment horizon of 90 days Strategy Shares is expected to generate 229.18 times more return on investment than IShares Trust. However, Strategy Shares is 229.18 times more volatile than iShares Trust . It trades about 0.28 of its potential returns per unit of risk. iShares Trust is currently generating about -0.01 per unit of risk. If you would invest  0.00  in Strategy Shares on October 8, 2024 and sell it today you would earn a total of  2,460  from holding Strategy Shares or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.42%
Values	Daily Returns

Strategy Shares  vs.  iShares Trust

Strategy Shares

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Strategy Shares displayed solid returns over the last few months and may actually be approaching a breakup point.

iShares Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Trust may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Strategy Shares and IShares Trust

The main advantage of trading using opposite Strategy Shares and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategy Shares 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 Strategy Shares 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.