Correlation Between IShares Core and United States
Can any of the company-specific risk be diversified away by investing in both IShares Core and United States 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 United States 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 United States Oil, you can compare the effects of market volatilities on IShares Core and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and United States.
Diversification Opportunities for IShares Core and United States
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and United is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and United States Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Oil 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Oil has no effect on the direction of IShares Core i.e., IShares Core and United States go up and down completely randomly.
Pair Corralation between IShares Core and United States
Considering the 90-day investment horizon iShares Core SP is expected to under-perform the United States. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core SP is 1.33 times less risky than United States. The etf trades about -0.15 of its potential returns per unit of risk. The United States Oil is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,729 in United States Oil on January 26, 2024 and sell it today you would earn a total of 235.00 from holding United States Oil or generate 3.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
iShares Core SP vs. United States Oil
Performance |
Timeline |
iShares Core SP |
United States Oil |
IShares Core and United States Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Core and United States
The main advantage of trading using opposite IShares Core and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.IShares Core vs. SPDR MSCI EAFE | IShares Core vs. SPDR MSCI Emerging | IShares Core vs. SPDR Russell 1000 | IShares Core vs. SPDR Russell 1000 |
United States vs. HUMANA INC | United States vs. Aquagold International | United States vs. Barloworld Ltd ADR | United States vs. Morningstar Unconstrained Allocation |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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