Correlation Between IShares Dividend and Strategy Shares

Can any of the company-specific risk be diversified away by investing in both IShares Dividend 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 Dividend 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 Dividend and and Strategy Shares, you can compare the effects of market volatilities on IShares Dividend 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 Dividend with a short position of Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Dividend and Strategy Shares.

Diversification Opportunities for IShares Dividend and Strategy Shares

-0.01

Correlation Coefficient

IShares Dividend  Strategy Shares

Good diversification

The 3 months correlation between IShares and Strategy is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dividend and and Strategy Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares and IShares Dividend 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 Dividend and 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 has no effect on the direction of IShares Dividend i.e., IShares Dividend and Strategy Shares go up and down completely randomly.

Pair Corralation between IShares Dividend and Strategy Shares

Given the investment horizon of 90 days iShares Dividend and is expected to under-perform the Strategy Shares. But the etf apears to be less risky and, when comparing its historical volatility, iShares Dividend and is 83.92 times less risky than Strategy Shares. The etf trades about -0.03 of its potential returns per unit of risk. The Strategy Shares is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Strategy Shares on February 1, 2025 and sell it today you would earn a total of  2,450  from holding Strategy Shares or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.3%
Values	Daily Returns

iShares Dividend and  vs.  Strategy Shares

iShares Dividend

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Dividend and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares Dividend is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Strategy Shares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Strategy Shares sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Dividend and Strategy Shares

The main advantage of trading using opposite IShares Dividend and Strategy Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Dividend 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 Dividend and and Strategy Shares 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.