Correlation Between IShares Core and 3EDGE Dynamic

Can any of the company-specific risk be diversified away by investing in both IShares Core and 3EDGE Dynamic 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 3EDGE Dynamic 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 3EDGE Dynamic Fixed, you can compare the effects of market volatilities on IShares Core and 3EDGE Dynamic 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 3EDGE Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and 3EDGE Dynamic.

Diversification Opportunities for IShares Core and 3EDGE Dynamic

-0.06

Correlation Coefficient

IShares Core  3EDGE Dynamic

Good diversification

The 3 months correlation between IShares and 3EDGE is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and 3EDGE Dynamic Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3EDGE Dynamic Fixed 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 3EDGE Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3EDGE Dynamic Fixed has no effect on the direction of IShares Core i.e., IShares Core and 3EDGE Dynamic go up and down completely randomly.

Pair Corralation between IShares Core and 3EDGE Dynamic

Considering the 90-day investment horizon iShares Core SP is expected to generate 5.2 times more return on investment than 3EDGE Dynamic. However, IShares Core is 5.2 times more volatile than 3EDGE Dynamic Fixed. It trades about 0.11 of its potential returns per unit of risk. 3EDGE Dynamic Fixed is currently generating about -0.14 per unit of risk. If you would invest  50,171  in iShares Core SP on October 12, 2024 and sell it today you would earn a total of  9,048  from holding iShares Core SP or generate 18.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	36.36%
Values	Daily Returns

iShares Core SP  vs.  3EDGE Dynamic Fixed

iShares Core SP

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 2 (%) 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.

3EDGE Dynamic Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 3EDGE Dynamic Fixed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, 3EDGE Dynamic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Core and 3EDGE Dynamic

The main advantage of trading using opposite IShares Core and 3EDGE Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, 3EDGE Dynamic 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 3EDGE Dynamic will offset losses from the drop in 3EDGE Dynamic's long position.

The idea behind iShares Core SP and 3EDGE Dynamic Fixed 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 Valuation module to check real value of public entities based on technical and fundamental data.