Correlation Between IShares Technology and TrueShares Technology

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

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

Diversification Opportunities for IShares Technology and TrueShares Technology

0.87

Correlation Coefficient

IShares Technology  TrueShares Technology

Very poor diversification

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

Pair Corralation between IShares Technology and TrueShares Technology

Considering the 90-day investment horizon iShares Technology ETF is expected to under-perform the TrueShares Technology. But the etf apears to be less risky and, when comparing its historical volatility, iShares Technology ETF is 1.29 times less risky than TrueShares Technology. The etf trades about -0.12 of its potential returns per unit of risk. The TrueShares Technology AI is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  3,938  in TrueShares Technology AI on December 30, 2024 and sell it today you would lose (432.00) from holding TrueShares Technology AI or give up 10.97% of portfolio value over 90 days.

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

iShares Technology ETF  vs.  TrueShares Technology AI

iShares Technology ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Technology ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

TrueShares Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueShares Technology AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with IShares Technology and TrueShares Technology

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

The idea behind iShares Technology ETF and TrueShares Technology AI 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.