Correlation Between IShares Semiconductor and Spear Alpha

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

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

Diversification Opportunities for IShares Semiconductor and Spear Alpha

0.94

Correlation Coefficient

IShares Semiconductor  Spear Alpha

Almost no diversification

The 3 months correlation between IShares and Spear is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares Semiconductor ETF and Spear Alpha ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spear Alpha ETF and IShares Semiconductor 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 Semiconductor ETF are associated (or correlated) with Spear Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spear Alpha ETF has no effect on the direction of IShares Semiconductor i.e., IShares Semiconductor and Spear Alpha go up and down completely randomly.

Pair Corralation between IShares Semiconductor and Spear Alpha

Given the investment horizon of 90 days IShares Semiconductor is expected to generate 1.51 times less return on investment than Spear Alpha. But when comparing it to its historical volatility, iShares Semiconductor ETF is 1.14 times less risky than Spear Alpha. It trades about 0.23 of its potential returns per unit of risk. Spear Alpha ETF is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,261  in Spear Alpha ETF on May 5, 2025 and sell it today you would earn a total of  955.00  from holding Spear Alpha ETF or generate 42.24% return on investment over 90 days.

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

iShares Semiconductor ETF  vs.  Spear Alpha ETF

iShares Semiconductor ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Semiconductor ETF are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, IShares Semiconductor showed solid returns over the last few months and may actually be approaching a breakup point.

Spear Alpha ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spear Alpha ETF are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Spear Alpha showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Semiconductor and Spear Alpha

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

The idea behind iShares Semiconductor ETF and Spear Alpha ETF 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.