Correlation Between IShares Core and Blockchain Technologies

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

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

Diversification Opportunities for IShares Core and Blockchain Technologies

0.81

Correlation Coefficient

IShares Core  Blockchain Technologies

Very poor diversification

The 3 months correlation between IShares and Blockchain is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Equity and Blockchain Technologies ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blockchain Technologies and IShares Core 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 Core Equity are associated (or correlated) with Blockchain Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blockchain Technologies has no effect on the direction of IShares Core i.e., IShares Core and Blockchain Technologies go up and down completely randomly.

Pair Corralation between IShares Core and Blockchain Technologies

Assuming the 90 days trading horizon iShares Core Equity is expected to generate 0.22 times more return on investment than Blockchain Technologies. However, iShares Core Equity is 4.48 times less risky than Blockchain Technologies. It trades about -0.12 of its potential returns per unit of risk. Blockchain Technologies ETF is currently generating about -0.15 per unit of risk. If you would invest  3,428  in iShares Core Equity on October 4, 2024 and sell it today you would lose (56.00) from holding iShares Core Equity or give up 1.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

iShares Core Equity  vs.  Blockchain Technologies ETF

iShares Core Equity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Equity are ranked lower than 9 (%) 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 recent stock price disarray, may contribute to short-term losses for the investors.

Blockchain Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blockchain Technologies ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Blockchain Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and Blockchain Technologies

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

The idea behind iShares Core Equity and Blockchain Technologies ETF 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 Transaction History module to view history of all your transactions and understand their impact on performance.