Correlation Between IShares Trust and ALPS Clean

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

By analyzing existing cross correlation between iShares Trust and ALPS Clean Energy, you can compare the effects of market volatilities on IShares Trust and ALPS Clean 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 Trust with a short position of ALPS Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and ALPS Clean.

Diversification Opportunities for IShares Trust and ALPS Clean

0.91

Correlation Coefficient

IShares Trust  ALPS Clean

Almost no diversification

The 3 months correlation between IShares and ALPS is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and ALPS Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPS Clean Energy and IShares Trust 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 Trust are associated (or correlated) with ALPS Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPS Clean Energy has no effect on the direction of IShares Trust i.e., IShares Trust and ALPS Clean go up and down completely randomly.

Pair Corralation between IShares Trust and ALPS Clean

Given the investment horizon of 90 days IShares Trust is expected to generate 2.78 times less return on investment than ALPS Clean. But when comparing it to its historical volatility, iShares Trust is 3.73 times less risky than ALPS Clean. It trades about 0.23 of its potential returns per unit of risk. ALPS Clean Energy is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,250  in ALPS Clean Energy on May 3, 2025 and sell it today you would earn a total of  469.00  from holding ALPS Clean Energy or generate 20.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

iShares Trust  vs.  ALPS Clean Energy

iShares Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, IShares Trust may actually be approaching a critical reversion point that can send shares even higher in September 2025.

ALPS Clean Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALPS Clean Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, ALPS Clean unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Trust and ALPS Clean

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

The idea behind iShares Trust and ALPS Clean Energy 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.