Correlation Between IREIT MarketVector and IShares Core

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

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

Diversification Opportunities for IREIT MarketVector and IShares Core

0.19

Correlation Coefficient

IREIT MarketVector  IShares Core

Average diversification

The 3 months correlation between IREIT and IShares is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding iREIT MarketVector and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and IREIT MarketVector 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 iREIT MarketVector 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 SP has no effect on the direction of IREIT MarketVector i.e., IREIT MarketVector and IShares Core go up and down completely randomly.

Pair Corralation between IREIT MarketVector and IShares Core

Given the investment horizon of 90 days iREIT MarketVector is expected to generate 0.93 times more return on investment than IShares Core. However, iREIT MarketVector is 1.08 times less risky than IShares Core. It trades about 0.0 of its potential returns per unit of risk. iShares Core SP is currently generating about -0.12 per unit of risk. If you would invest  1,983  in iREIT MarketVector on December 27, 2024 and sell it today you would lose (8.10) from holding iREIT MarketVector or give up 0.41% of portfolio value over 90 days.

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

iREIT MarketVector  vs.  iShares Core SP

iREIT MarketVector

Risk-Adjusted Performance

Very Weak

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

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. Even with latest inconsistent performance, the Etf's forward-looking indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with IREIT MarketVector and IShares Core

The main advantage of trading using opposite IREIT MarketVector and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IREIT MarketVector 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 iREIT MarketVector and iShares Core SP 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.