Correlation Between ERShares Private and IShares Trust

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

By analyzing existing cross correlation between ERShares Private Public Crossover and iShares Trust , you can compare the effects of market volatilities on ERShares Private and IShares Trust 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 ERShares Private with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ERShares Private and IShares Trust.

Diversification Opportunities for ERShares Private and IShares Trust

0.75

Correlation Coefficient

ERShares Private  IShares Trust

Poor diversification

The 3 months correlation between ERShares and IShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ERShares Private Public Crosso and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and ERShares Private 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 ERShares Private Public Crossover are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of ERShares Private i.e., ERShares Private and IShares Trust go up and down completely randomly.

Pair Corralation between ERShares Private and IShares Trust

Given the investment horizon of 90 days ERShares Private Public Crossover is expected to generate 1.04 times more return on investment than IShares Trust. However, ERShares Private is 1.04 times more volatile than iShares Trust . It trades about -0.11 of its potential returns per unit of risk. iShares Trust is currently generating about -0.13 per unit of risk. If you would invest  1,825  in ERShares Private Public Crossover on December 28, 2024 and sell it today you would lose (210.00) from holding ERShares Private Public Crossover or give up 11.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

ERShares Private Public Crosso  vs.  iShares Trust

ERShares Private Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days ERShares Private Public Crossover has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain 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 Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with ERShares Private and IShares Trust

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

The idea behind ERShares Private Public Crossover and iShares 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.