Correlation Between IShares Floating and IShares Treasury
Can any of the company-specific risk be diversified away by investing in both IShares Floating and IShares Treasury 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 Floating and IShares Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Floating Rate and iShares Treasury Floating, you can compare the effects of market volatilities on IShares Floating and IShares Treasury 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 Floating with a short position of IShares Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Floating and IShares Treasury.
Diversification Opportunities for IShares Floating and IShares Treasury
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Floating Rate and iShares Treasury Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Floating and IShares Floating 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 Floating Rate are associated (or correlated) with IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Floating has no effect on the direction of IShares Floating i.e., IShares Floating and IShares Treasury go up and down completely randomly.
Pair Corralation between IShares Floating and IShares Treasury
Given the investment horizon of 90 days iShares Floating Rate is expected to generate 3.15 times more return on investment than IShares Treasury. However, IShares Floating is 3.15 times more volatile than iShares Treasury Floating. It trades about 0.37 of its potential returns per unit of risk. iShares Treasury Floating is currently generating about 0.99 per unit of risk. If you would invest 4,965 in iShares Floating Rate on September 1, 2024 and sell it today you would earn a total of 142.00 from holding iShares Floating Rate or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Floating Rate vs. iShares Treasury Floating
Performance |
| Timeline |
| iShares Floating Rate |
| iShares Treasury Floating |
IShares Floating and IShares Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Floating and IShares Treasury
The main advantage of trading using opposite IShares Floating and IShares Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Floating position performs unexpectedly, IShares Treasury 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 Treasury will offset losses from the drop in IShares Treasury's long position.| IShares Floating vs. SPDR Bloomberg Investment | IShares Floating vs. Invesco Senior Loan | IShares Floating vs. PIMCO Enhanced Short | IShares Floating vs. iShares Short Maturity |
| IShares Treasury vs. WisdomTree Floating Rate | IShares Treasury vs. iShares 0 3 Month | IShares Treasury vs. iShares Ultra Short Term | IShares Treasury vs. iShares Floating Rate |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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