Correlation Between IShares Core and REX Crypto

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

Diversification Opportunities for IShares Core and REX Crypto

0.07

Correlation Coefficient

IShares Core  REX Crypto

Significant diversification

The 3 months correlation between IShares and REX is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and REX Crypto Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX Crypto Equity 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 REX Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX Crypto Equity has no effect on the direction of IShares Core i.e., IShares Core and REX Crypto go up and down completely randomly.

Pair Corralation between IShares Core and REX Crypto

Considering the 90-day investment horizon iShares Core SP is expected to generate 0.36 times more return on investment than REX Crypto. However, iShares Core SP is 2.78 times less risky than REX Crypto. It trades about 0.08 of its potential returns per unit of risk. REX Crypto Equity is currently generating about -0.03 per unit of risk. If you would invest  57,782  in iShares Core SP on October 9, 2024 and sell it today you would earn a total of  2,048  from holding iShares Core SP or generate 3.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	37.1%
Values	Daily Returns

iShares Core SP  vs.  REX Crypto Equity

iShares Core SP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

REX Crypto Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REX Crypto Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, REX Crypto is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares Core and REX Crypto

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

The idea behind iShares Core SP and REX Crypto Equity 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.