Correlation Between IShares Yield and IShares Interest
Can any of the company-specific risk be diversified away by investing in both IShares Yield and IShares Interest 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 Yield and IShares Interest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Yield Optimized and iShares Interest Rate, you can compare the effects of market volatilities on IShares Yield and IShares Interest 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 Yield with a short position of IShares Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Yield and IShares Interest.
Diversification Opportunities for IShares Yield and IShares Interest
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding iShares Yield Optimized and iShares Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Interest Rate and IShares Yield 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 Yield Optimized are associated (or correlated) with IShares Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Interest Rate has no effect on the direction of IShares Yield i.e., IShares Yield and IShares Interest go up and down completely randomly.
Pair Corralation between IShares Yield and IShares Interest
Given the investment horizon of 90 days IShares Yield is expected to generate 1.55 times less return on investment than IShares Interest. In addition to that, IShares Yield is 1.17 times more volatile than iShares Interest Rate. It trades about 0.12 of its total potential returns per unit of risk. iShares Interest Rate is currently generating about 0.21 per unit of volatility. If you would invest 2,419 in iShares Interest Rate on August 31, 2024 and sell it today you would earn a total of 27.00 from holding iShares Interest Rate or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Yield Optimized vs. iShares Interest Rate
Performance |
| Timeline |
| iShares Yield Optimized |
| iShares Interest Rate |
IShares Yield and IShares Interest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Yield and IShares Interest
The main advantage of trading using opposite IShares Yield and IShares Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Yield position performs unexpectedly, IShares Interest 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 Interest will offset losses from the drop in IShares Interest's long position.| IShares Yield vs. iShares Interest Rate | IShares Yield vs. iShares Agency Bond | IShares Yield vs. iShares JP Morgan | IShares Yield vs. iShares Interest Rate |
| IShares Interest vs. iShares Interest Rate | IShares Interest vs. iShares Interest Rate | IShares Interest vs. iShares Edge Investment | IShares Interest vs. iShares Inflation Hedged |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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