Correlation Between IShares Equity and BlackRock Equity

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

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

Diversification Opportunities for IShares Equity and BlackRock Equity

0.99

Correlation Coefficient

IShares Equity  BlackRock Equity

No risk reduction

The 3 months correlation between IShares and BlackRock is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Equity Factor and BlackRock Equity Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Equity Factor and IShares Equity 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 Equity Factor are associated (or correlated) with BlackRock Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Equity Factor has no effect on the direction of IShares Equity i.e., IShares Equity and BlackRock Equity go up and down completely randomly.

Pair Corralation between IShares Equity and BlackRock Equity

Given the investment horizon of 90 days iShares Equity Factor is expected to generate 0.97 times more return on investment than BlackRock Equity. However, iShares Equity Factor is 1.03 times less risky than BlackRock Equity. It trades about -0.07 of its potential returns per unit of risk. BlackRock Equity Factor is currently generating about -0.08 per unit of risk. If you would invest  6,044  in iShares Equity Factor on December 30, 2024 and sell it today you would lose (291.00) from holding iShares Equity Factor or give up 4.81% of portfolio value over 90 days.

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

iShares Equity Factor  vs.  BlackRock Equity Factor

iShares Equity Factor

Risk-Adjusted Performance

Very Weak

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

BlackRock Equity Factor

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares Equity and BlackRock Equity

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

The idea behind iShares Equity Factor and BlackRock Equity Factor 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.