Correlation Between IShares SP and FundX Aggressive

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

Diversification Opportunities for IShares SP and FundX Aggressive

0.87

Correlation Coefficient

IShares SP  FundX Aggressive

Very poor diversification

The 3 months correlation between IShares and FundX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and FundX Aggressive ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FundX Aggressive 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 Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FundX Aggressive ETF has no effect on the direction of IShares SP i.e., IShares SP and FundX Aggressive go up and down completely randomly.

Pair Corralation between IShares SP and FundX Aggressive

Considering the 90-day investment horizon iShares SP 500 is expected to generate 0.91 times more return on investment than FundX Aggressive. However, iShares SP 500 is 1.1 times less risky than FundX Aggressive. It trades about 0.11 of its potential returns per unit of risk. FundX Aggressive ETF is currently generating about 0.1 per unit of risk. If you would invest  9,312  in iShares SP 500 on August 30, 2024 and sell it today you would earn a total of  682.00  from holding iShares SP 500 or generate 7.32% return on investment over 90 days.

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

iShares SP 500  vs.  FundX Aggressive ETF

iShares SP 500

Risk-Adjusted Performance

8 of 100

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 weak basic indicators, IShares SP may actually be approaching a critical reversion point that can send shares even higher in December 2024.

FundX Aggressive ETF

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FundX Aggressive ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, FundX Aggressive may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with IShares SP and FundX Aggressive

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

The idea behind iShares SP 500 and FundX Aggressive 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.