Correlation Between IShares Preferred and Listed Funds

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

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

Diversification Opportunities for IShares Preferred and Listed Funds

0.93

Correlation Coefficient

IShares Preferred  Listed Funds

Almost no diversification

The 3 months correlation between IShares and Listed is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Preferred and and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds Trust and IShares Preferred 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 Preferred and are associated (or correlated) with Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of IShares Preferred i.e., IShares Preferred and Listed Funds go up and down completely randomly.

Pair Corralation between IShares Preferred and Listed Funds

Considering the 90-day investment horizon iShares Preferred and is expected to generate 0.8 times more return on investment than Listed Funds. However, iShares Preferred and is 1.26 times less risky than Listed Funds. It trades about -0.02 of its potential returns per unit of risk. Listed Funds Trust is currently generating about -0.02 per unit of risk. If you would invest  3,108  in iShares Preferred and on December 28, 2024 and sell it today you would lose (23.00) from holding iShares Preferred and or give up 0.74% of portfolio value over 90 days.

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

iShares Preferred and  vs.  Listed Funds Trust

iShares Preferred

Risk-Adjusted Performance

Very Weak

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

Listed Funds Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Listed Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Listed Funds is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Preferred and Listed Funds

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

The idea behind iShares Preferred and and Listed Funds Trust 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.