Correlation Between IShares Core and Listed Funds

Can any of the company-specific risk be diversified away by investing in both IShares Core and Listed Funds 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 Listed Funds 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 Listed Funds Trust, you can compare the effects of market volatilities on IShares Core and Listed Funds 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 Listed Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Listed Funds.

Diversification Opportunities for IShares Core and Listed Funds

0.59

Correlation Coefficient

IShares Core  Listed Funds

Very weak diversification

The 3 months correlation between IShares and Listed is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Total and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds Trust 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 Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of IShares Core i.e., IShares Core and Listed Funds go up and down completely randomly.

Pair Corralation between IShares Core and Listed Funds

Given the investment horizon of 90 days iShares Core Total is expected to generate 0.97 times more return on investment than Listed Funds. However, iShares Core Total is 1.03 times less risky than Listed Funds. It trades about 0.14 of its potential returns per unit of risk. Listed Funds Trust is currently generating about 0.01 per unit of risk. If you would invest  4,493  in iShares Core Total on December 29, 2024 and sell it today you would earn a total of  105.00  from holding iShares Core Total or generate 2.34% return on investment over 90 days.

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

iShares Core Total  vs.  Listed Funds Trust

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 10 (%) 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.

Listed Funds Trust

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares Core and Listed Funds

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

The idea behind iShares Core Total and Listed Funds Trust 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 Transaction History module to view history of all your transactions and understand their impact on performance.