Correlation Between IShares Treasury and IShares GNMA
Can any of the company-specific risk be diversified away by investing in both IShares Treasury and IShares GNMA 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 Treasury and IShares GNMA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Treasury Bond and iShares GNMA Bond, you can compare the effects of market volatilities on IShares Treasury and IShares GNMA 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 Treasury with a short position of IShares GNMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and IShares GNMA.
Diversification Opportunities for IShares Treasury and IShares GNMA
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 Treasury Bond and iShares GNMA Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares GNMA Bond and IShares Treasury 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 Treasury Bond are associated (or correlated) with IShares GNMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares GNMA Bond has no effect on the direction of IShares Treasury i.e., IShares Treasury and IShares GNMA go up and down completely randomly.
Pair Corralation between IShares Treasury and IShares GNMA
Given the investment horizon of 90 days IShares Treasury is expected to generate 1.65 times less return on investment than IShares GNMA. But when comparing it to its historical volatility, iShares Treasury Bond is 1.17 times less risky than IShares GNMA. It trades about 0.11 of its potential returns per unit of risk. iShares GNMA Bond is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,332 in iShares GNMA Bond on September 1, 2024 and sell it today you would earn a total of 60.00 from holding iShares GNMA Bond or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Treasury Bond vs. iShares GNMA Bond
Performance |
| Timeline |
| iShares Treasury Bond |
| iShares GNMA Bond |
IShares Treasury and IShares GNMA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Treasury and IShares GNMA
The main advantage of trading using opposite IShares Treasury and IShares GNMA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury position performs unexpectedly, IShares GNMA 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 GNMA will offset losses from the drop in IShares GNMA's long position.| IShares Treasury vs. SPDR Portfolio Mortgage | IShares Treasury vs. Janus Henderson Short | IShares Treasury vs. iShares CMBS ETF | IShares Treasury vs. Janus Detroit Street |
| IShares GNMA vs. iShares Agency Bond | IShares GNMA vs. iShares 1 3 Year | IShares GNMA vs. iShares Core 1 5 | IShares GNMA vs. iShares Core 10 |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |