Correlation Between IShares Bloomberg and IShares Commodity
Can any of the company-specific risk be diversified away by investing in both IShares Bloomberg and IShares Commodity 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 Bloomberg and IShares Commodity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Bloomberg Roll and iShares Commodity Curve, you can compare the effects of market volatilities on IShares Bloomberg and IShares Commodity 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 Bloomberg with a short position of IShares Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Bloomberg and IShares Commodity.
Diversification Opportunities for IShares Bloomberg and IShares Commodity
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares Bloomberg Roll and iShares Commodity Curve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Commodity Curve and IShares Bloomberg 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 Bloomberg Roll are associated (or correlated) with IShares Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Commodity Curve has no effect on the direction of IShares Bloomberg i.e., IShares Bloomberg and IShares Commodity go up and down completely randomly.
Pair Corralation between IShares Bloomberg and IShares Commodity
Given the investment horizon of 90 days iShares Bloomberg Roll is expected to under-perform the IShares Commodity. But the etf apears to be less risky and, when comparing its historical volatility, iShares Bloomberg Roll is 1.22 times less risky than IShares Commodity. The etf trades about -0.05 of its potential returns per unit of risk. The iShares Commodity Curve is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,107 in iShares Commodity Curve on August 26, 2024 and sell it today you would lose (10.00) from holding iShares Commodity Curve or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Bloomberg Roll vs. iShares Commodity Curve
Performance |
| Timeline |
| iShares Bloomberg Roll |
| iShares Commodity Curve |
IShares Bloomberg and IShares Commodity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Bloomberg and IShares Commodity
The main advantage of trading using opposite IShares Bloomberg and IShares Commodity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Bloomberg position performs unexpectedly, IShares Commodity 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 Commodity will offset losses from the drop in IShares Commodity's long position.| IShares Bloomberg vs. abrdn Bloomberg All | IShares Bloomberg vs. GraniteShares Bloomberg Commodity | IShares Bloomberg vs. iShares GSCI Commodity | IShares Bloomberg vs. abrdn Bloomberg All |
| IShares Commodity vs. First Trust Global | IShares Commodity vs. iShares ESG Aware | IShares Commodity vs. iShares Fallen Angels |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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