Correlation Between IShares Core and Running Oak

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

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

Diversification Opportunities for IShares Core and Running Oak

0.82

Correlation Coefficient

IShares Core  Running Oak

Very poor diversification

The 3 months correlation between IShares and Running is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Running Oak Efficient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Running Oak Efficient and IShares Core 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 Core SP are associated (or correlated) with Running Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Running Oak Efficient has no effect on the direction of IShares Core i.e., IShares Core and Running Oak go up and down completely randomly.

Pair Corralation between IShares Core and Running Oak

Considering the 90-day investment horizon iShares Core SP is expected to under-perform the Running Oak. In addition to that, IShares Core is 1.34 times more volatile than Running Oak Efficient. It trades about -0.09 of its total potential returns per unit of risk. Running Oak Efficient is currently generating about 0.0 per unit of volatility. If you would invest  3,278  in Running Oak Efficient on December 29, 2024 and sell it today you would lose (5.00) from holding Running Oak Efficient or give up 0.15% of portfolio value over 90 days.

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

iShares Core SP  vs.  Running Oak Efficient

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, IShares Core is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Running Oak Efficient

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares Core and Running Oak

The main advantage of trading using opposite IShares Core and Running Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Running Oak 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 Running Oak will offset losses from the drop in Running Oak's long position.

The idea behind iShares Core SP and Running Oak Efficient 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.