Correlation Between RPAR Risk and IShares Core

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

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

Diversification Opportunities for RPAR Risk and IShares Core

0.37

Correlation Coefficient

RPAR Risk  IShares Core

Weak diversification

The 3 months correlation between RPAR and IShares is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding RPAR Risk Parity and iShares Core Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Growth and RPAR Risk 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 RPAR Risk Parity 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 Growth has no effect on the direction of RPAR Risk i.e., RPAR Risk and IShares Core go up and down completely randomly.

Pair Corralation between RPAR Risk and IShares Core

Given the investment horizon of 90 days RPAR Risk is expected to generate 3.45 times less return on investment than IShares Core. In addition to that, RPAR Risk is 1.37 times more volatile than iShares Core Growth. It trades about 0.02 of its total potential returns per unit of risk. iShares Core Growth is currently generating about 0.09 per unit of volatility. If you would invest  4,508  in iShares Core Growth on September 23, 2024 and sell it today you would earn a total of  1,241  from holding iShares Core Growth or generate 27.53% return on investment over 90 days.

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

RPAR Risk Parity  vs.  iShares Core Growth

RPAR Risk Parity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RPAR Risk Parity has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

iShares Core Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with RPAR Risk and IShares Core

The main advantage of trading using opposite RPAR Risk and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RPAR Risk 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 RPAR Risk Parity and iShares Core Growth 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.