Correlation Between IShares Core and BK Technologies

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

Diversification Opportunities for IShares Core and BK Technologies

-0.08

Correlation Coefficient

IShares Core  BK Technologies

Good diversification

The 3 months correlation between IShares and BKTI is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and BK Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BK 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 SP are associated (or correlated) with BK Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BK Technologies has no effect on the direction of IShares Core i.e., IShares Core and BK Technologies go up and down completely randomly.

Pair Corralation between IShares Core and BK Technologies

Considering the 90-day investment horizon iShares Core SP is expected to generate 0.23 times more return on investment than BK Technologies. However, iShares Core SP is 4.27 times less risky than BK Technologies. It trades about 0.23 of its potential returns per unit of risk. BK Technologies is currently generating about -0.04 per unit of risk. If you would invest  53,089  in iShares Core SP on March 16, 2024 and sell it today you would earn a total of  1,278  from holding iShares Core SP or generate 2.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

iShares Core SP  vs.  BK Technologies

iShares Core SP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

BK Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BK Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, BK Technologies is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares Core and BK Technologies

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

The idea behind iShares Core SP and BK Technologies 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.