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 MSCI, 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

0.53

Correlation Coefficient

IShares CoreSP  IShares Core

Very weak diversification

The 3 months correlation between IShares and IShares is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares CoreSP MidCap and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI 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 MSCI 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. But the etf apears to be less risky and, when comparing its historical volatility, iShares CoreSP MidCap is 1.01 times less risky than IShares Core. The etf trades about -0.1 of its potential returns per unit of risk. The iShares Core MSCI is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,147  in iShares Core MSCI on December 1, 2024 and sell it today you would lose (72.00) from holding iShares Core MSCI or give up 2.29% of portfolio value over 90 days.

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

iShares CoreSP MidCap  vs.  iShares Core MSCI

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 MSCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. 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 MSCI 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.