Correlation Between IShares Core and ETFS Commodity

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

Diversification Opportunities for IShares Core and ETFS Commodity

-0.44

Correlation Coefficient

IShares Core  ETFS Commodity

Very good diversification

The 3 months correlation between IShares and ETFS is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and ETFS Commodity Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Commodity Securities 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 ETFS Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Commodity Securities has no effect on the direction of IShares Core i.e., IShares Core and ETFS Commodity go up and down completely randomly.

Pair Corralation between IShares Core and ETFS Commodity

If you would invest  56,232  in iShares Core SP on September 18, 2024 and sell it today you would earn a total of  4,751  from holding iShares Core SP or generate 8.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

iShares Core SP  vs.  ETFS Commodity Securities

iShares Core SP

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ETFS Commodity Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETFS Commodity Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ETFS Commodity is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Core and ETFS Commodity

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

The idea behind iShares Core SP and ETFS Commodity Securities 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.