Correlation Between Ishares Municipal and Global Fixed
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Global Fixed 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 Municipal and Global Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Municipal Bond and Global Fixed Income, you can compare the effects of market volatilities on Ishares Municipal and Global Fixed 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 Municipal with a short position of Global Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Global Fixed.
Diversification Opportunities for Ishares Municipal and Global Fixed
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ishares and Global is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Global Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Fixed Income and Ishares Municipal 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 Municipal Bond are associated (or correlated) with Global Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Fixed Income has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Global Fixed go up and down completely randomly.
Pair Corralation between Ishares Municipal and Global Fixed
Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 2.13 times more return on investment than Global Fixed. However, Ishares Municipal is 2.13 times more volatile than Global Fixed Income. It trades about 0.19 of its potential returns per unit of risk. Global Fixed Income is currently generating about 0.26 per unit of risk. If you would invest 1,104 in Ishares Municipal Bond on September 4, 2024 and sell it today you would earn a total of 13.00 from holding Ishares Municipal Bond or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Global Fixed Income
Performance |
| Timeline |
| Ishares Municipal Bond |
| Global Fixed Income |
Ishares Municipal and Global Fixed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Global Fixed
The main advantage of trading using opposite Ishares Municipal and Global Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Global Fixed 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 Global Fixed will offset losses from the drop in Global Fixed's long position.| Ishares Municipal vs. Blackrock California Municipal | Ishares Municipal vs. Blackrock Balanced Capital | Ishares Municipal vs. Blackrock Eurofund Class | Ishares Municipal vs. Blackrock Funds |
| Global Fixed vs. John Hancock Funds | Global Fixed vs. Franklin Lifesmart 2050 | Global Fixed vs. T Rowe Price | Global Fixed vs. T Rowe Price |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |