Correlation Between Arrow ETF and IShares Core

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

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

Diversification Opportunities for Arrow ETF and IShares Core

0.35

Correlation Coefficient

Arrow ETF  IShares Core

Weak diversification

The 3 months correlation between Arrow and IShares is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Arrow ETF Trust and iShares Core Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Aggressive and Arrow ETF 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 Arrow ETF 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 Aggressive has no effect on the direction of Arrow ETF i.e., Arrow ETF and IShares Core go up and down completely randomly.

Pair Corralation between Arrow ETF and IShares Core

Given the investment horizon of 90 days Arrow ETF Trust is expected to generate 0.89 times more return on investment than IShares Core. However, Arrow ETF Trust is 1.13 times less risky than IShares Core. It trades about 0.19 of its potential returns per unit of risk. iShares Core Aggressive is currently generating about -0.01 per unit of risk. If you would invest  1,203  in Arrow ETF Trust on December 28, 2024 and sell it today you would earn a total of  91.00  from holding Arrow ETF Trust or generate 7.56% return on investment over 90 days.

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

Arrow ETF Trust  vs.  iShares Core Aggressive

Arrow ETF Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow ETF Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Arrow ETF may actually be approaching a critical reversion point that can send shares even higher in April 2025.

iShares Core Aggressive

Risk-Adjusted Performance

Weak

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

Pair Trading with Arrow ETF and IShares Core

The main advantage of trading using opposite Arrow ETF and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow ETF 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 Arrow ETF Trust and iShares Core Aggressive 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.