Correlation Between Ishares Municipal and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Growth Strategy 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 Growth Strategy 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 Growth Strategy Fund, you can compare the effects of market volatilities on Ishares Municipal and Growth Strategy 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 Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Growth Strategy.
Diversification Opportunities for Ishares Municipal and Growth Strategy
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ishares and Growth is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy 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 Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Growth Strategy go up and down completely randomly.
Pair Corralation between Ishares Municipal and Growth Strategy
Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 0.4 times more return on investment than Growth Strategy. However, Ishares Municipal Bond is 2.48 times less risky than Growth Strategy. It trades about -0.17 of its potential returns per unit of risk. Growth Strategy Fund is currently generating about -0.11 per unit of risk. If you would invest 1,088 in Ishares Municipal Bond on January 12, 2025 and sell it today you would lose (35.00) from holding Ishares Municipal Bond or give up 3.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Growth Strategy Fund
Performance |
| Timeline |
| Ishares Municipal Bond |
| Growth Strategy |
Ishares Municipal and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Growth Strategy
The main advantage of trading using opposite Ishares Municipal and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Growth Strategy 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 Growth Strategy will offset losses from the drop in Growth Strategy's long position.| Ishares Municipal vs. Real Estate Ultrasector | Ishares Municipal vs. Aew Real Estate | Ishares Municipal vs. Amg Managers Centersquare | Ishares Municipal vs. Nomura Real Estate |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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