Correlation Between IShares SP and 2023 EFT

Can any of the company-specific risk be diversified away by investing in both IShares SP and 2023 EFT 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 SP and 2023 EFT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares SP 500 and 2023 EFT Series, you can compare the effects of market volatilities on IShares SP and 2023 EFT 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 SP with a short position of 2023 EFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and 2023 EFT.

Diversification Opportunities for IShares SP and 2023 EFT

0.86

Correlation Coefficient

IShares SP  2023 EFT

Very poor diversification

The 3 months correlation between IShares and 2023 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and 2023 EFT Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2023 EFT Series and IShares SP 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 SP 500 are associated (or correlated) with 2023 EFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2023 EFT Series has no effect on the direction of IShares SP i.e., IShares SP and 2023 EFT go up and down completely randomly.

Pair Corralation between IShares SP and 2023 EFT

Considering the 90-day investment horizon IShares SP is expected to generate 4.07 times less return on investment than 2023 EFT. But when comparing it to its historical volatility, iShares SP 500 is 1.06 times less risky than 2023 EFT. It trades about 0.02 of its potential returns per unit of risk. 2023 EFT Series is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,158  in 2023 EFT Series on December 28, 2024 and sell it today you would earn a total of  136.00  from holding 2023 EFT Series or generate 4.31% return on investment over 90 days.

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

iShares SP 500  vs.  2023 EFT Series

iShares SP 500

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP 500 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares SP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

2023 EFT Series

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 2023 EFT Series are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 2023 EFT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares SP and 2023 EFT

The main advantage of trading using opposite IShares SP and 2023 EFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, 2023 EFT 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 2023 EFT will offset losses from the drop in 2023 EFT's long position.

The idea behind iShares SP 500 and 2023 EFT Series 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.