Correlation Between IShares Core and Siren DIVCON

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

Diversification Opportunities for IShares Core and Siren DIVCON

0.6

Correlation Coefficient

IShares Core  Siren DIVCON

Poor diversification

The 3 months correlation between IShares and Siren is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Siren DIVCON Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siren DIVCON Leaders 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 Siren DIVCON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siren DIVCON Leaders has no effect on the direction of IShares Core i.e., IShares Core and Siren DIVCON go up and down completely randomly.

Pair Corralation between IShares Core and Siren DIVCON

Considering the 90-day investment horizon iShares Core SP is expected to generate 1.15 times more return on investment than Siren DIVCON. However, IShares Core is 1.15 times more volatile than Siren DIVCON Leaders. It trades about -0.05 of its potential returns per unit of risk. Siren DIVCON Leaders is currently generating about -0.34 per unit of risk. If you would invest  59,812  in iShares Core SP on September 24, 2024 and sell it today you would lose (479.00) from holding iShares Core SP or give up 0.8% of portfolio value over 90 days.

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

iShares Core SP  vs.  Siren DIVCON Leaders

iShares Core SP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 6 (%) 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.

Siren DIVCON Leaders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siren DIVCON Leaders has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Siren DIVCON is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Core and Siren DIVCON

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

The idea behind iShares Core SP and Siren DIVCON Leaders 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.