Correlation Between IShares Core and IQ Winslow

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

Diversification Opportunities for IShares Core and IQ Winslow

1.0

Correlation Coefficient

IShares Core  IQ Winslow

No risk reduction

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

Pair Corralation between IShares Core and IQ Winslow

Given the investment horizon of 90 days IShares Core is expected to generate 1.17 times less return on investment than IQ Winslow. But when comparing it to its historical volatility, iShares Core SP is 1.14 times less risky than IQ Winslow. It trades about 0.12 of its potential returns per unit of risk. IQ Winslow Large is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,608  in IQ Winslow Large on September 5, 2024 and sell it today you would earn a total of  2,270  from holding IQ Winslow Large or generate 87.04% return on investment over 90 days.

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

iShares Core SP  vs.  IQ Winslow Large

iShares Core SP

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, IShares Core reported solid returns over the last few months and may actually be approaching a breakup point.

IQ Winslow Large

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Winslow Large are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, IQ Winslow reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and IQ Winslow

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

The idea behind iShares Core SP and IQ Winslow Large 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.