Correlation Between IShares Core and Collaborative Investment

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

Diversification Opportunities for IShares Core and Collaborative Investment

0.51

Correlation Coefficient

IShares Core  Collaborative Investment

Very weak diversification

The 3 months correlation between IShares and Collaborative is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Collaborative Investment Serie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collaborative Investment 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 Collaborative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collaborative Investment has no effect on the direction of IShares Core i.e., IShares Core and Collaborative Investment go up and down completely randomly.

Pair Corralation between IShares Core and Collaborative Investment

Considering the 90-day investment horizon IShares Core is expected to generate 2.67 times less return on investment than Collaborative Investment. In addition to that, IShares Core is 1.26 times more volatile than Collaborative Investment Series. It trades about 0.03 of its total potential returns per unit of risk. Collaborative Investment Series is currently generating about 0.1 per unit of volatility. If you would invest  3,046  in Collaborative Investment Series on October 22, 2024 and sell it today you would earn a total of  40.00  from holding Collaborative Investment Series or generate 1.31% return on investment over 90 days.

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

iShares Core SP  vs.  Collaborative Investment Serie

iShares Core SP

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 4 (%) 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.

Collaborative Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Core and Collaborative Investment

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

The idea behind iShares Core SP and Collaborative Investment 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.