Correlation Between IShares Consumer and IShares Core

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

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

Diversification Opportunities for IShares Consumer and IShares Core

-0.54

Correlation Coefficient

IShares Consumer  IShares Core

Excellent diversification

The 3 months correlation between IShares and IShares is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Consumer Discretionary and iShares Core High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core High and IShares Consumer 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 Consumer Discretionary are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core High has no effect on the direction of IShares Consumer i.e., IShares Consumer and IShares Core go up and down completely randomly.

Pair Corralation between IShares Consumer and IShares Core

Considering the 90-day investment horizon iShares Consumer Discretionary is expected to under-perform the IShares Core. In addition to that, IShares Consumer is 1.72 times more volatile than iShares Core High. It trades about -0.12 of its total potential returns per unit of risk. iShares Core High is currently generating about 0.17 per unit of volatility. If you would invest  11,088  in iShares Core High on December 29, 2024 and sell it today you would earn a total of  860.00  from holding iShares Core High or generate 7.76% return on investment over 90 days.

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

iShares Consumer Discretionary  vs.  iShares Core High

iShares Consumer Dis

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Consumer Discretionary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

iShares Core High

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core High are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IShares Consumer and IShares Core

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

The idea behind iShares Consumer Discretionary and iShares Core High 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.