Correlation Between IShares Core and Barrons 400

Can any of the company-specific risk be diversified away by investing in both IShares Core and Barrons 400 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 Barrons 400 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Core SP and Barrons 400 ETF, you can compare the effects of market volatilities on IShares Core and Barrons 400 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 Barrons 400. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Barrons 400.

Diversification Opportunities for IShares Core and Barrons 400

0.96

Correlation Coefficient

IShares Core  Barrons 400

Almost no diversification

The 3 months correlation between IShares and Barrons is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Barrons 400 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrons 400 ETF 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 SP are associated (or correlated) with Barrons 400. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrons 400 ETF has no effect on the direction of IShares Core i.e., IShares Core and Barrons 400 go up and down completely randomly.

Pair Corralation between IShares Core and Barrons 400

Considering the 90-day investment horizon iShares Core SP is expected to generate 1.08 times more return on investment than Barrons 400. However, IShares Core is 1.08 times more volatile than Barrons 400 ETF. It trades about 0.04 of its potential returns per unit of risk. Barrons 400 ETF is currently generating about 0.02 per unit of risk. If you would invest  5,713  in iShares Core SP on January 28, 2024 and sell it today you would earn a total of  69.00  from holding iShares Core SP or generate 1.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.73%
Values	Daily Returns

iShares Core SP  vs.  Barrons 400 ETF

iShares Core SP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking indicators, IShares Core is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Barrons 400 ETF

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barrons 400 ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Barrons 400 is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Core and Barrons 400

The main advantage of trading using opposite IShares Core and Barrons 400 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Barrons 400 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 Barrons 400 will offset losses from the drop in Barrons 400's long position.

The idea behind iShares Core SP and Barrons 400 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.