Correlation Between IShares Short and Listed Funds

Can any of the company-specific risk be diversified away by investing in both IShares Short 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 Short 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 Short Treasury and Listed Funds Trust, you can compare the effects of market volatilities on IShares Short 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 Short with a short position of Listed Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and Listed Funds.

Diversification Opportunities for IShares Short and Listed Funds

0.99

Correlation Coefficient

IShares Short  Listed Funds

No risk reduction

The 3 months correlation between IShares and Listed is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Treasury 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 Short 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 Short Treasury 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 Short i.e., IShares Short and Listed Funds go up and down completely randomly.

Pair Corralation between IShares Short and Listed Funds

Considering the 90-day investment horizon IShares Short is expected to generate 1.66 times less return on investment than Listed Funds. But when comparing it to its historical volatility, iShares Short Treasury is 7.75 times less risky than Listed Funds. It trades about 1.5 of its potential returns per unit of risk. Listed Funds Trust is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  2,499  in Listed Funds Trust on September 22, 2024 and sell it today you would earn a total of  17.00  from holding Listed Funds Trust or generate 0.68% return on investment over 90 days.

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

iShares Short Treasury  vs.  Listed Funds Trust

iShares Short Treasury

Risk-Adjusted Performance

89 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Short Treasury are ranked lower than 89 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical indicators, IShares Short is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Listed Funds Trust

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Listed Funds Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Listed Funds is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Short and Listed Funds

The main advantage of trading using opposite IShares Short and Listed Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short 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 Short Treasury 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.