Correlation Between IShares Core and Middlefield Healthcare

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

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

Diversification Opportunities for IShares Core and Middlefield Healthcare

-0.53

Correlation Coefficient

IShares Core  Middlefield Healthcare

Excellent diversification

The 3 months correlation between IShares and Middlefield is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SPTSX and Middlefield Healthcare Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlefield Healthcare 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 SPTSX are associated (or correlated) with Middlefield Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlefield Healthcare has no effect on the direction of IShares Core i.e., IShares Core and Middlefield Healthcare go up and down completely randomly.

Pair Corralation between IShares Core and Middlefield Healthcare

Assuming the 90 days trading horizon iShares Core SPTSX is expected to generate 0.42 times more return on investment than Middlefield Healthcare. However, iShares Core SPTSX is 2.38 times less risky than Middlefield Healthcare. It trades about 0.48 of its potential returns per unit of risk. Middlefield Healthcare Life is currently generating about 0.0 per unit of risk. If you would invest  3,853  in iShares Core SPTSX on April 22, 2025 and sell it today you would earn a total of  506.00  from holding iShares Core SPTSX or generate 13.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

iShares Core SPTSX  vs.  Middlefield Healthcare Life

iShares Core SPTSX

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SPTSX are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Middlefield Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Middlefield Healthcare Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Middlefield Healthcare is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and Middlefield Healthcare

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

The idea behind iShares Core SPTSX and Middlefield Healthcare Life 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.