Correlation Between IShares Core and Exchange Listed

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

Diversification Opportunities for IShares Core and Exchange Listed

0.91

Correlation Coefficient

IShares Core  Exchange Listed

Almost no diversification

The 3 months correlation between IShares and Exchange is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Exchange Listed Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Listed Funds 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 Exchange Listed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Listed Funds has no effect on the direction of IShares Core i.e., IShares Core and Exchange Listed go up and down completely randomly.

Pair Corralation between IShares Core and Exchange Listed

Given the investment horizon of 90 days iShares Core SP is expected to under-perform the Exchange Listed. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core SP is 1.12 times less risky than Exchange Listed. The etf trades about -0.44 of its potential returns per unit of risk. The Exchange Listed Funds is currently generating about -0.3 of returns per unit of risk over similar time horizon. If you would invest  8,303  in Exchange Listed Funds on September 29, 2024 and sell it today you would lose (399.00) from holding Exchange Listed Funds or give up 4.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

iShares Core SP  vs.  Exchange Listed Funds

iShares Core SP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Exchange Listed Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Listed Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Exchange Listed is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and Exchange Listed

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

The idea behind iShares Core SP and Exchange Listed Funds 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.