Correlation Between LS 1x and IShares Treasury
Can any of the company-specific risk be diversified away by investing in both LS 1x and IShares Treasury 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 LS 1x and IShares Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS 1x Amazon and iShares Treasury Bond, you can compare the effects of market volatilities on LS 1x and IShares Treasury 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 LS 1x with a short position of IShares Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS 1x and IShares Treasury.
Diversification Opportunities for LS 1x and IShares Treasury
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 1AMZ and IShares is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding LS 1x Amazon and iShares Treasury Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Bond and LS 1x 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 LS 1x Amazon are associated (or correlated) with IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Bond has no effect on the direction of LS 1x i.e., LS 1x and IShares Treasury go up and down completely randomly.
Pair Corralation between LS 1x and IShares Treasury
Assuming the 90 days trading horizon LS 1x Amazon is expected to generate 1.99 times more return on investment than IShares Treasury. However, LS 1x is 1.99 times more volatile than iShares Treasury Bond. It trades about 0.08 of its potential returns per unit of risk. iShares Treasury Bond is currently generating about 0.0 per unit of risk. If you would invest 384.00 in LS 1x Amazon on August 31, 2024 and sell it today you would earn a total of 249.00 from holding LS 1x Amazon or generate 64.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS 1x Amazon vs. iShares Treasury Bond
Performance |
| Timeline |
| LS 1x Amazon |
| iShares Treasury Bond |
LS 1x and IShares Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS 1x and IShares Treasury
The main advantage of trading using opposite LS 1x and IShares Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS 1x position performs unexpectedly, IShares Treasury 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 IShares Treasury will offset losses from the drop in IShares Treasury's long position.| LS 1x vs. Scottish Mortgage Investment | LS 1x vs. VinaCapital Vietnam Opportunity | LS 1x vs. Edinburgh Worldwide Investment | LS 1x vs. Baillie Gifford Growth |
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Check out your portfolio center.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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