Correlation Between IShares SP and FundX ETF

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

Diversification Opportunities for IShares SP and FundX ETF

0.73

Correlation Coefficient

IShares SP  FundX ETF

Poor diversification

The 3 months correlation between IShares and FundX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and FundX ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FundX ETF 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 FundX ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FundX ETF has no effect on the direction of IShares SP i.e., IShares SP and FundX ETF go up and down completely randomly.

Pair Corralation between IShares SP and FundX ETF

Considering the 90-day investment horizon iShares SP 500 is expected to generate 1.1 times more return on investment than FundX ETF. However, IShares SP is 1.1 times more volatile than FundX ETF. It trades about -0.1 of its potential returns per unit of risk. FundX ETF is currently generating about -0.12 per unit of risk. If you would invest  10,230  in iShares SP 500 on December 28, 2024 and sell it today you would lose (975.00) from holding iShares SP 500 or give up 9.53% of portfolio value over 90 days.

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

iShares SP 500  vs.  FundX ETF

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 latest fragile performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

FundX ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days FundX ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with IShares SP and FundX ETF

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

The idea behind iShares SP 500 and FundX ETF 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.