Correlation Between IShares Core and BlackRock Industry

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

Diversification Opportunities for IShares Core and BlackRock Industry

0.8

Correlation Coefficient

IShares Core  BlackRock Industry

Very poor diversification

The 3 months correlation between IShares and BlackRock is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and BlackRock Industry Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Industry 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 BlackRock Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Industry has no effect on the direction of IShares Core i.e., IShares Core and BlackRock Industry go up and down completely randomly.

Pair Corralation between IShares Core and BlackRock Industry

Considering the 90-day investment horizon iShares Core SP is expected to generate 0.93 times more return on investment than BlackRock Industry. However, iShares Core SP is 1.07 times less risky than BlackRock Industry. It trades about -0.08 of its potential returns per unit of risk. BlackRock Industry Rotation is currently generating about -0.1 per unit of risk. If you would invest  58,915  in iShares Core SP on December 29, 2024 and sell it today you would lose (3,103) from holding iShares Core SP or give up 5.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

iShares Core SP  vs.  BlackRock Industry Rotation

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

BlackRock Industry

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock Industry Rotation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with IShares Core and BlackRock Industry

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

The idea behind iShares Core SP and BlackRock Industry Rotation 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.