Correlation Between ETRACS 2xMonthly and IShares Core

Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly 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 ETRACS 2xMonthly and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETRACS 2xMonthly Pay and iShares Core Dividend, you can compare the effects of market volatilities on ETRACS 2xMonthly 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 ETRACS 2xMonthly with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and IShares Core.

Diversification Opportunities for ETRACS 2xMonthly and IShares Core

-0.39

Correlation Coefficient

ETRACS 2xMonthly  IShares Core

Very good diversification

The 3 months correlation between ETRACS and IShares is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay and iShares Core Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Dividend and ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay 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 Dividend has no effect on the direction of ETRACS 2xMonthly i.e., ETRACS 2xMonthly and IShares Core go up and down completely randomly.

Pair Corralation between ETRACS 2xMonthly and IShares Core

Given the investment horizon of 90 days ETRACS 2xMonthly is expected to generate 6.03 times less return on investment than IShares Core. In addition to that, ETRACS 2xMonthly is 2.55 times more volatile than iShares Core Dividend. It trades about 0.01 of its total potential returns per unit of risk. iShares Core Dividend is currently generating about 0.08 per unit of volatility. If you would invest  4,854  in iShares Core Dividend on September 19, 2024 and sell it today you would earn a total of  1,400  from holding iShares Core Dividend or generate 28.84% return on investment over 90 days.

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

ETRACS 2xMonthly Pay  vs.  iShares Core Dividend

ETRACS 2xMonthly Pay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETRACS 2xMonthly Pay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

iShares Core Dividend

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Dividend are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ETRACS 2xMonthly and IShares Core

The main advantage of trading using opposite ETRACS 2xMonthly and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay and iShares Core Dividend 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.