Correlation Between IShares Core and Tachlit Index

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Can any of the company-specific risk be diversified away by investing in both IShares Core and Tachlit Index 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 Tachlit Index 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 Tachlit Index Sal, you can compare the effects of market volatilities on IShares Core and Tachlit Index 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 Tachlit Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Tachlit Index.

Diversification Opportunities for IShares Core and Tachlit Index

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between IShares and Tachlit is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding IShares Core SP and Tachlit Index Sal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tachlit Index Sal 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 Tachlit Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tachlit Index Sal has no effect on the direction of IShares Core i.e., IShares Core and Tachlit Index go up and down completely randomly.

Pair Corralation between IShares Core and Tachlit Index

Considering the 90-day investment horizon IShares Core is expected to generate 1.08 times less return on investment than Tachlit Index. But when comparing it to its historical volatility, IShares Core SP is 1.19 times less risky than Tachlit Index. It trades about 0.26 of its potential returns per unit of risk. Tachlit Index Sal is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  141,200  in Tachlit Index Sal on December 29, 2023 and sell it today you would earn a total of  4,400  from holding Tachlit Index Sal or generate 3.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy81.82%
ValuesDaily Returns

IShares Core SP  vs.  Tachlit Index Sal

 Performance 
       Timeline  
IShares Core SP 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in IShares Core SP are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Tachlit Index Sal 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Tachlit Index Sal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Tachlit Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

IShares Core and Tachlit Index Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares Core and Tachlit Index

The main advantage of trading using opposite IShares Core and Tachlit Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Tachlit Index 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 Tachlit Index will offset losses from the drop in Tachlit Index's long position.
The idea behind IShares Core SP and Tachlit Index Sal 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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