Correlation Between IShares Core and AB Core

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

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

Diversification Opportunities for IShares Core and AB Core

1.0

Correlation Coefficient

IShares Core  AB Core

No risk reduction

The 3 months correlation between IShares and CPLS is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Total and AB Core Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Core Plus 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 Total are associated (or correlated) with AB Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Core Plus has no effect on the direction of IShares Core i.e., IShares Core and AB Core go up and down completely randomly.

Pair Corralation between IShares Core and AB Core

Given the investment horizon of 90 days iShares Core Total is expected to generate 0.95 times more return on investment than AB Core. However, iShares Core Total is 1.05 times less risky than AB Core. It trades about 0.11 of its potential returns per unit of risk. AB Core Plus is currently generating about 0.08 per unit of risk. If you would invest  4,493  in iShares Core Total on December 28, 2024 and sell it today you would earn a total of  81.00  from holding iShares Core Total or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

iShares Core Total  vs.  AB Core Plus

iShares Core Total

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Total are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AB Core Plus

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AB Core Plus are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, AB Core is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Core and AB Core

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

The idea behind iShares Core Total and AB Core Plus 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.