Correlation Between Beta Shares and IShares Core

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

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

Diversification Opportunities for Beta Shares and IShares Core

0.42

Correlation Coefficient

Beta Shares  IShares Core

Very weak diversification

The 3 months correlation between Beta and IShares is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Beta Shares SPASX and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI and Beta Shares 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 Beta Shares SPASX 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 MSCI has no effect on the direction of Beta Shares i.e., Beta Shares and IShares Core go up and down completely randomly.

Pair Corralation between Beta Shares and IShares Core

Assuming the 90 days trading horizon Beta Shares SPASX is expected to generate 1.16 times more return on investment than IShares Core. However, Beta Shares is 1.16 times more volatile than iShares Core MSCI. It trades about -0.03 of its potential returns per unit of risk. iShares Core MSCI is currently generating about -0.05 per unit of risk. If you would invest  1,669  in Beta Shares SPASX on December 2, 2024 and sell it today you would lose (41.00) from holding Beta Shares SPASX or give up 2.46% of portfolio value over 90 days.

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

Beta Shares SPASX  vs.  iShares Core MSCI

Beta Shares SPASX

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beta Shares SPASX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Beta Shares is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares Core MSCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Beta Shares and IShares Core

The main advantage of trading using opposite Beta Shares and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beta Shares 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 Beta Shares SPASX and iShares Core MSCI 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.