Correlation Between IShares SP and IQ Winslow

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

Diversification Opportunities for IShares SP and IQ Winslow

0.95

Correlation Coefficient

IShares SP  IQ Winslow

Almost no diversification

The 3 months correlation between IShares and IWLG is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and IQ Winslow Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Winslow Large 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 IQ Winslow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Winslow Large has no effect on the direction of IShares SP i.e., IShares SP and IQ Winslow go up and down completely randomly.

Pair Corralation between IShares SP and IQ Winslow

Considering the 90-day investment horizon iShares SP 500 is expected to generate 1.01 times more return on investment than IQ Winslow. However, IShares SP is 1.01 times more volatile than IQ Winslow Large. It trades about 0.0 of its potential returns per unit of risk. IQ Winslow Large is currently generating about -0.01 per unit of risk. If you would invest  10,152  in iShares SP 500 on December 2, 2024 and sell it today you would lose (35.00) from holding iShares SP 500 or give up 0.34% of portfolio value over 90 days.

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

iShares SP 500  vs.  IQ Winslow Large

iShares SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares SP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

IQ Winslow Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days IQ Winslow Large has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, IQ Winslow is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares SP and IQ Winslow

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

The idea behind iShares SP 500 and IQ Winslow Large 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.