Correlation Between IShares SP and EGSHARES BLUE

Can any of the company-specific risk be diversified away by investing in both IShares SP and EGSHARES BLUE 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 SP and EGSHARES BLUE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares SP 500 and EGSHARES BLUE CHIP, you can compare the effects of market volatilities on IShares SP and EGSHARES BLUE 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 SP with a short position of EGSHARES BLUE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and EGSHARES BLUE.

Diversification Opportunities for IShares SP and EGSHARES BLUE

0.84

Correlation Coefficient

IShares SP  EGSHARES BLUE

Very poor diversification

The 3 months correlation between IShares and EGSHARES is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and EGSHARES BLUE CHIP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGSHARES BLUE CHIP and IShares SP 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 SP 500 are associated (or correlated) with EGSHARES BLUE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGSHARES BLUE CHIP has no effect on the direction of IShares SP i.e., IShares SP and EGSHARES BLUE go up and down completely randomly.

Pair Corralation between IShares SP and EGSHARES BLUE

Considering the 90-day investment horizon iShares SP 500 is expected to generate 0.75 times more return on investment than EGSHARES BLUE. However, iShares SP 500 is 1.34 times less risky than EGSHARES BLUE. It trades about 0.11 of its potential returns per unit of risk. EGSHARES BLUE CHIP is currently generating about 0.07 per unit of risk. If you would invest  9,952  in iShares SP 500 on November 19, 2024 and sell it today you would earn a total of  711.00  from holding iShares SP 500 or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

iShares SP 500  vs.  EGSHARES BLUE CHIP

iShares SP 500

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP 500 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, IShares SP may actually be approaching a critical reversion point that can send shares even higher in March 2025.

EGSHARES BLUE CHIP

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EGSHARES BLUE CHIP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, EGSHARES BLUE is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares SP and EGSHARES BLUE

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

The idea behind iShares SP 500 and EGSHARES BLUE CHIP 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.