Correlation Between IShares Intermediate and IShares Core
Can any of the company-specific risk be diversified away by investing in both IShares Intermediate and IShares Core 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 Intermediate and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Intermediate GovernmentCredit and iShares Core 10, you can compare the effects of market volatilities on IShares Intermediate and IShares Core 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 Intermediate with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Intermediate and IShares Core.
Diversification Opportunities for IShares Intermediate and IShares Core
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Intermediate Governmen and iShares Core 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core 10 and IShares Intermediate 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 Intermediate GovernmentCredit are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core 10 has no effect on the direction of IShares Intermediate i.e., IShares Intermediate and IShares Core go up and down completely randomly.
Pair Corralation between IShares Intermediate and IShares Core
Considering the 90-day investment horizon IShares Intermediate is expected to generate 2.32 times less return on investment than IShares Core. But when comparing it to its historical volatility, iShares Intermediate GovernmentCredit is 3.05 times less risky than IShares Core. It trades about 0.15 of its potential returns per unit of risk. iShares Core 10 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,858 in iShares Core 10 on November 4, 2024 and sell it today you would earn a total of 65.00 from holding iShares Core 10 or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Intermediate Governmen vs. iShares Core 10
Performance |
| Timeline |
| iShares Intermediate |
| iShares Core 10 |
IShares Intermediate and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Intermediate and IShares Core
The main advantage of trading using opposite IShares Intermediate and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Intermediate position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| IShares Intermediate vs. iShares GovernmentCredit Bond | IShares Intermediate vs. iShares Agency Bond | IShares Intermediate vs. iShares New York | IShares Intermediate vs. iShares MBS ETF |
| IShares Core vs. iShares Core 1 5 | IShares Core vs. iShares Agency Bond | IShares Core vs. iShares Intermediate GovernmentCredit | IShares Core vs. iShares GNMA Bond |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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