Correlation Between IShares Core and Strategy Shares

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

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

Diversification Opportunities for IShares Core and Strategy Shares

0.82

Correlation Coefficient

IShares Core  Strategy Shares

Very poor diversification

The 3 months correlation between IShares and Strategy is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Conservative and Strategy Shares Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares Nasdaq 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 Conservative are associated (or correlated) with Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares Nasdaq has no effect on the direction of IShares Core i.e., IShares Core and Strategy Shares go up and down completely randomly.

Pair Corralation between IShares Core and Strategy Shares

Considering the 90-day investment horizon iShares Core Conservative is expected to generate 0.65 times more return on investment than Strategy Shares. However, iShares Core Conservative is 1.54 times less risky than Strategy Shares. It trades about -0.05 of its potential returns per unit of risk. Strategy Shares Nasdaq is currently generating about -0.17 per unit of risk. If you would invest  3,753  in iShares Core Conservative on September 23, 2024 and sell it today you would lose (18.00) from holding iShares Core Conservative or give up 0.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

iShares Core Conservative  vs.  Strategy Shares Nasdaq

iShares Core Conservative

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core Conservative has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Strategy Shares Nasdaq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategy Shares Nasdaq has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Strategy Shares is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares Core and Strategy Shares

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

The idea behind iShares Core Conservative and Strategy Shares Nasdaq 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.