Correlation Between IShares 1 and IShares Global
Can any of the company-specific risk be diversified away by investing in both IShares 1 and IShares Global 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 1 and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 1 5 Year and iShares Global Monthly, you can compare the effects of market volatilities on IShares 1 and IShares Global 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 1 with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and IShares Global.
Diversification Opportunities for IShares 1 and IShares Global
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 5 Year and iShares Global Monthly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Monthly and IShares 1 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 1 5 Year are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Monthly has no effect on the direction of IShares 1 i.e., IShares 1 and IShares Global go up and down completely randomly.
Pair Corralation between IShares 1 and IShares Global
Assuming the 90 days trading horizon IShares 1 is expected to generate 3.85 times less return on investment than IShares Global. But when comparing it to its historical volatility, iShares 1 5 Year is 2.99 times less risky than IShares Global. It trades about 0.19 of its potential returns per unit of risk. iShares Global Monthly is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,195 in iShares Global Monthly on September 1, 2024 and sell it today you would earn a total of 67.00 from holding iShares Global Monthly or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares 1 5 Year vs. iShares Global Monthly
Performance |
| Timeline |
| iShares 1 5 |
| iShares Global Monthly |
IShares 1 and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 1 and IShares Global
The main advantage of trading using opposite IShares 1 and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| IShares 1 vs. Vanguard Total Market | IShares 1 vs. iShares High Quality | IShares 1 vs. iShares 1 10Yr Laddered | IShares 1 vs. iShares Canadian HYBrid |
| IShares Global vs. iShares Global Infrastructure | IShares Global vs. iShares Global Real | IShares Global vs. iShares Dividend Growers | IShares Global vs. iShares 1 5 Year |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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