Correlation Between IShares Core and Tech Innovators

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

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

Diversification Opportunities for IShares Core and Tech Innovators

0.52

Correlation Coefficient

IShares Core  Tech Innovators

Very weak diversification

The 3 months correlation between IShares and Tech is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Tech Innovators Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tech Innovators Yield 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 SP are associated (or correlated) with Tech Innovators. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tech Innovators Yield has no effect on the direction of IShares Core i.e., IShares Core and Tech Innovators go up and down completely randomly.

Pair Corralation between IShares Core and Tech Innovators

Assuming the 90 days trading horizon IShares Core is expected to generate 1.68 times less return on investment than Tech Innovators. But when comparing it to its historical volatility, iShares Core SP is 1.88 times less risky than Tech Innovators. It trades about 0.34 of its potential returns per unit of risk. Tech Innovators Yield is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,515  in Tech Innovators Yield on April 23, 2025 and sell it today you would earn a total of  450.00  from holding Tech Innovators Yield or generate 29.7% return on investment over 90 days.

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

iShares Core SP  vs.  Tech Innovators Yield

iShares Core SP

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares Core displayed solid returns over the last few months and may actually be approaching a breakup point.

Tech Innovators Yield

Risk-Adjusted Performance

Solid

Over the last 90 days Tech Innovators Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical and fundamental indicators, Tech Innovators exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and Tech Innovators

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

The idea behind iShares Core SP and Tech Innovators Yield 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.