Correlation Between IShares CoreSP and IShares Core

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

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

Diversification Opportunities for IShares CoreSP and IShares Core

-0.66

Correlation Coefficient

IShares CoreSP  IShares Core

Excellent diversification

The 3 months correlation between IShares and IShares is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding iShares CoreSP MidCap and iShares Core Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Cash and IShares CoreSP 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 CoreSP MidCap 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 Cash has no effect on the direction of IShares CoreSP i.e., IShares CoreSP and IShares Core go up and down completely randomly.

Pair Corralation between IShares CoreSP and IShares Core

Assuming the 90 days trading horizon iShares CoreSP MidCap is expected to under-perform the IShares Core. In addition to that, IShares CoreSP is 35.74 times more volatile than iShares Core Cash. It trades about -0.11 of its total potential returns per unit of risk. iShares Core Cash is currently generating about 0.74 per unit of volatility. If you would invest  9,963  in iShares Core Cash on December 30, 2024 and sell it today you would earn a total of  108.00  from holding iShares Core Cash or generate 1.08% return on investment over 90 days.

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

iShares CoreSP MidCap  vs.  iShares Core Cash

iShares CoreSP MidCap

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares CoreSP MidCap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, IShares CoreSP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares Core Cash

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Cash are ranked lower than 58 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares CoreSP and IShares Core

The main advantage of trading using opposite IShares CoreSP and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares CoreSP 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 iShares CoreSP MidCap and iShares Core Cash 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.