Correlation Between Ishares Trust and BlackRock ETF

Can any of the company-specific risk be diversified away by investing in both Ishares Trust 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 Trust 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 Trust and BlackRock ETF Trust, you can compare the effects of market volatilities on Ishares Trust 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 Trust with a short position of BlackRock ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Trust and BlackRock ETF.

Diversification Opportunities for Ishares Trust and BlackRock ETF

0.63

Correlation Coefficient

Ishares Trust  BlackRock ETF

Poor diversification

The 3 months correlation between Ishares and BlackRock is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Trust 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 Trust 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 Trust 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 Trust i.e., Ishares Trust and BlackRock ETF go up and down completely randomly.

Pair Corralation between Ishares Trust and BlackRock ETF

Given the investment horizon of 90 days Ishares Trust is expected to generate 1.05 times less return on investment than BlackRock ETF. In addition to that, Ishares Trust is 1.46 times more volatile than BlackRock ETF Trust. It trades about 0.07 of its total potential returns per unit of risk. BlackRock ETF Trust is currently generating about 0.11 per unit of volatility. If you would invest  2,226  in BlackRock ETF Trust on October 27, 2024 and sell it today you would earn a total of  1,086  from holding BlackRock ETF Trust or generate 48.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.63%
Values	Daily Returns

Ishares Trust   vs.  BlackRock ETF Trust

Ishares Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ishares Trust may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BlackRock ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ishares Trust and BlackRock ETF

The main advantage of trading using opposite Ishares Trust and BlackRock ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Trust 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 Trust 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.