Correlation Between IShares Core and Future Fund

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

Diversification Opportunities for IShares Core and Future Fund

0.68

Correlation Coefficient

IShares Core  Future Fund

Poor diversification

The 3 months correlation between IShares and Future is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and The Future Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Fund 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 Future Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Fund has no effect on the direction of IShares Core i.e., IShares Core and Future Fund go up and down completely randomly.

Pair Corralation between IShares Core and Future Fund

Considering the 90-day investment horizon iShares Core SP is expected to under-perform the Future Fund. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core SP is 1.33 times less risky than Future Fund. The etf trades about -0.11 of its potential returns per unit of risk. The The Future Fund is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,648  in The Future Fund on October 10, 2024 and sell it today you would lose (50.50) from holding The Future Fund or give up 1.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

iShares Core SP  vs.  The Future Fund

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.

Future Fund

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Future Fund are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Future Fund may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IShares Core and Future Fund

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

The idea behind iShares Core SP and The Future Fund 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..