Correlation Between IShares Flexible and IShares SP

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

By analyzing existing cross correlation between iShares Flexible Monthly and iShares SP Mid Cap, you can compare the effects of market volatilities on IShares Flexible and IShares SP 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 Flexible with a short position of IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Flexible and IShares SP.

Diversification Opportunities for IShares Flexible and IShares SP

-0.32

Correlation Coefficient

IShares Flexible  IShares SP

Very good diversification

The 3 months correlation between IShares and IShares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding iShares Flexible Monthly and iShares SP Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP Mid and IShares Flexible 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 Flexible Monthly are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP Mid has no effect on the direction of IShares Flexible i.e., IShares Flexible and IShares SP go up and down completely randomly.

Pair Corralation between IShares Flexible and IShares SP

Assuming the 90 days trading horizon iShares Flexible Monthly is expected to generate 0.16 times more return on investment than IShares SP. However, iShares Flexible Monthly is 6.22 times less risky than IShares SP. It trades about 0.08 of its potential returns per unit of risk. iShares SP Mid Cap is currently generating about -0.1 per unit of risk. If you would invest  3,843  in iShares Flexible Monthly on December 30, 2024 and sell it today you would earn a total of  35.00  from holding iShares Flexible Monthly or generate 0.91% return on investment over 90 days.

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

iShares Flexible Monthly  vs.  iShares SP Mid Cap

iShares Flexible Monthly

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Flexible Monthly are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Flexible is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares SP Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares SP Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with IShares Flexible and IShares SP

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

The idea behind iShares Flexible Monthly and iShares SP Mid Cap 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.