Correlation Between IShares 25 and US Treasury
Can any of the company-specific risk be diversified away by investing in both IShares 25 and US 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 25 and US Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 25 Year and US Treasury 20, you can compare the effects of market volatilities on IShares 25 and US 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 25 with a short position of US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 25 and US Treasury.
Diversification Opportunities for IShares 25 and US Treasury
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and UTWY is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares 25 Year and US Treasury 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 20 and IShares 25 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 25 Year are associated (or correlated) with US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 20 has no effect on the direction of IShares 25 i.e., IShares 25 and US Treasury go up and down completely randomly.
Pair Corralation between IShares 25 and US Treasury
Given the investment horizon of 90 days iShares 25 Year is expected to generate 2.22 times more return on investment than US Treasury. However, IShares 25 is 2.22 times more volatile than US Treasury 20. It trades about 0.06 of its potential returns per unit of risk. US Treasury 20 is currently generating about 0.07 per unit of risk. If you would invest 1,073 in iShares 25 Year on August 30, 2024 and sell it today you would earn a total of 22.00 from holding iShares 25 Year or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 25 Year vs. US Treasury 20
Performance |
| Timeline |
| iShares 25 Year |
| US Treasury 20 |
IShares 25 and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 25 and US Treasury
The main advantage of trading using opposite IShares 25 and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 25 position performs unexpectedly, US 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 US Treasury will offset losses from the drop in US Treasury's long position.| IShares 25 vs. iShares Treasury Floating | IShares 25 vs. Schwab Long Term Treasury | IShares 25 vs. iShares iBonds Dec | IShares 25 vs. iShares iBonds Dec |
| US Treasury vs. US Treasury 30 | US Treasury vs. US Treasury 5 | US Treasury vs. US Treasury 7 | US Treasury vs. US Treasury 3 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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