Correlation Between ETRACS Monthly and IShares Interest
Can any of the company-specific risk be diversified away by investing in both ETRACS Monthly 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 ETRACS Monthly and IShares Interest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS Monthly Pay and iShares Interest Rate, you can compare the effects of market volatilities on ETRACS Monthly 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 ETRACS Monthly with a short position of IShares Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Monthly and IShares Interest.
Diversification Opportunities for ETRACS Monthly and IShares Interest
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETRACS and IShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay 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 ETRACS Monthly 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 ETRACS Monthly Pay 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 ETRACS Monthly i.e., ETRACS Monthly and IShares Interest go up and down completely randomly.
Pair Corralation between ETRACS Monthly and IShares Interest
Given the investment horizon of 90 days ETRACS Monthly Pay is expected to generate 2.95 times more return on investment than IShares Interest. However, ETRACS Monthly is 2.95 times more volatile than iShares Interest Rate. It trades about 0.09 of its potential returns per unit of risk. iShares Interest Rate is currently generating about 0.15 per unit of risk. If you would invest 1,753 in ETRACS Monthly Pay on August 27, 2024 and sell it today you would earn a total of 269.00 from holding ETRACS Monthly Pay or generate 15.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS Monthly Pay vs. iShares Interest Rate
Performance |
| Timeline |
| ETRACS Monthly Pay |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| iShares Interest Rate |
ETRACS Monthly and IShares Interest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS Monthly and IShares Interest
The main advantage of trading using opposite ETRACS Monthly and IShares Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Monthly 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.| ETRACS Monthly vs. ETRACS Quarterly Pay | ETRACS Monthly vs. Simplify Volatility Premium | ETRACS Monthly vs. ETRACS Monthly Pay | ETRACS Monthly vs. iShares Trust |
| IShares Interest vs. First Trust Senior | IShares Interest vs. First Trust Low | IShares Interest vs. First Trust Enhanced | IShares Interest vs. First Trust TCW |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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