Correlation Between Invesco BulletShares and IShares IBoxx
Can any of the company-specific risk be diversified away by investing in both Invesco BulletShares and IShares IBoxx 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 Invesco BulletShares and IShares IBoxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco BulletShares 2025 and iShares iBoxx Investment, you can compare the effects of market volatilities on Invesco BulletShares and IShares IBoxx 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 Invesco BulletShares with a short position of IShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco BulletShares and IShares IBoxx.
Diversification Opportunities for Invesco BulletShares and IShares IBoxx
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and IShares is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Invesco BulletShares 2025 and iShares iBoxx Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBoxx Investment and Invesco BulletShares 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 Invesco BulletShares 2025 are associated (or correlated) with IShares IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBoxx Investment has no effect on the direction of Invesco BulletShares i.e., Invesco BulletShares and IShares IBoxx go up and down completely randomly.
Pair Corralation between Invesco BulletShares and IShares IBoxx
Given the investment horizon of 90 days Invesco BulletShares 2025 is expected to generate 0.21 times more return on investment than IShares IBoxx. However, Invesco BulletShares 2025 is 4.74 times less risky than IShares IBoxx. It trades about 0.31 of its potential returns per unit of risk. iShares iBoxx Investment is currently generating about -0.04 per unit of risk. If you would invest 2,273 in Invesco BulletShares 2025 on September 12, 2024 and sell it today you would earn a total of 42.00 from holding Invesco BulletShares 2025 or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco BulletShares 2025 vs. iShares iBoxx Investment
Performance |
| Timeline |
| Invesco BulletShares 2025 |
| iShares iBoxx Investment |
Invesco BulletShares and IShares IBoxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco BulletShares and IShares IBoxx
The main advantage of trading using opposite Invesco BulletShares and IShares IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco BulletShares position performs unexpectedly, IShares IBoxx 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 IBoxx will offset losses from the drop in IShares IBoxx's long position.The idea behind Invesco BulletShares 2025 and iShares iBoxx Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| IShares IBoxx vs. American Century STOXX | IShares IBoxx vs. Franklin Liberty Investment | IShares IBoxx vs. Aquagold International | IShares IBoxx vs. Morningstar Unconstrained Allocation |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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