Correlation Between Ishares Municipal and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Old Westbury 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 Old Westbury 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 Old Westbury Credit, you can compare the effects of market volatilities on Ishares Municipal and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Old Westbury.
Diversification Opportunities for Ishares Municipal and Old Westbury
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ishares and Old is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Old Westbury Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Credit 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Credit has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Old Westbury go up and down completely randomly.
Pair Corralation between Ishares Municipal and Old Westbury
Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 0.72 times more return on investment than Old Westbury. However, Ishares Municipal Bond is 1.4 times less risky than Old Westbury. It trades about 0.07 of its potential returns per unit of risk. Old Westbury Credit is currently generating about 0.02 per unit of risk. If you would invest 1,106 in Ishares Municipal Bond on September 2, 2024 and sell it today you would earn a total of 11.00 from holding Ishares Municipal Bond or generate 0.99% 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. Old Westbury Credit
Performance |
| Timeline |
| Ishares Municipal Bond |
| Old Westbury Credit |
Ishares Municipal and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Old Westbury
The main advantage of trading using opposite Ishares Municipal and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Ishares Municipal vs. Calvert Developed Market | Ishares Municipal vs. Siit Emerging Markets | Ishares Municipal vs. Locorr Market Trend | Ishares Municipal vs. Ab All Market |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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