Correlation Between Ishares Municipal and Pace High
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Pace High 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 Pace High 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 Pace High Yield, you can compare the effects of market volatilities on Ishares Municipal and Pace High 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 Pace High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Pace High.
Diversification Opportunities for Ishares Municipal and Pace High
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ishares and Pace is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Pace High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace High Yield 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 Pace High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace High Yield has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Pace High go up and down completely randomly.
Pair Corralation between Ishares Municipal and Pace High
Assuming the 90 days horizon Ishares Municipal is expected to generate 1.46 times less return on investment than Pace High. In addition to that, Ishares Municipal is 2.56 times more volatile than Pace High Yield. It trades about 0.08 of its total potential returns per unit of risk. Pace High Yield is currently generating about 0.29 per unit of volatility. If you would invest 891.00 in Pace High Yield on September 13, 2024 and sell it today you would earn a total of 12.00 from holding Pace High Yield or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Pace High Yield
Performance |
| Timeline |
| Ishares Municipal Bond |
| Pace High Yield |
Ishares Municipal and Pace High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Pace High
The main advantage of trading using opposite Ishares Municipal and Pace High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Pace High 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 Pace High will offset losses from the drop in Pace High's long position.| Ishares Municipal vs. Calamos Dynamic Convertible | Ishares Municipal vs. Allianzgi Convertible Income | Ishares Municipal vs. Fidelity Sai Convertible | Ishares Municipal vs. Absolute Convertible Arbitrage |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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