Correlation Between IShares Core and AXS TSLA

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

Diversification Opportunities for IShares Core and AXS TSLA

-0.49

Correlation Coefficient

IShares Core  AXS TSLA

Very good diversification

The 3 months correlation between IShares and AXS is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and AXS TSLA Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS TSLA Bear 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 AXS TSLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS TSLA Bear has no effect on the direction of IShares Core i.e., IShares Core and AXS TSLA go up and down completely randomly.

Pair Corralation between IShares Core and AXS TSLA

Considering the 90-day investment horizon IShares Core is expected to generate 43.75 times less return on investment than AXS TSLA. But when comparing it to its historical volatility, iShares Core SP is 92.16 times less risky than AXS TSLA. It trades about 0.2 of its potential returns per unit of risk. AXS TSLA Bear is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,019  in AXS TSLA Bear on September 3, 2024 and sell it today you would earn a total of  988.00  from holding AXS TSLA Bear or generate 32.73% return on investment over 90 days.

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

iShares Core SP  vs.  AXS TSLA Bear

iShares Core SP

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AXS TSLA Bear

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AXS TSLA Bear are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, AXS TSLA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and AXS TSLA

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

The idea behind iShares Core SP and AXS TSLA Bear 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.