Correlation Between IShares IBoxx and Invesco BulletShares
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and Invesco BulletShares 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 IBoxx and Invesco BulletShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares iBoxx High and Invesco BulletShares 2024, you can compare the effects of market volatilities on IShares IBoxx and Invesco BulletShares 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 IBoxx with a short position of Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Invesco BulletShares.
Diversification Opportunities for IShares IBoxx and Invesco BulletShares
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Invesco is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and Invesco BulletShares 2024 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2024 and IShares IBoxx 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 iBoxx High are associated (or correlated) with Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2024 has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Invesco BulletShares go up and down completely randomly.
Pair Corralation between IShares IBoxx and Invesco BulletShares
Considering the 90-day investment horizon iShares iBoxx High is expected to generate 2.09 times more return on investment than Invesco BulletShares. However, IShares IBoxx is 2.09 times more volatile than Invesco BulletShares 2024. It trades about 0.09 of its potential returns per unit of risk. Invesco BulletShares 2024 is currently generating about 0.14 per unit of risk. If you would invest 6,653 in iShares iBoxx High on August 30, 2024 and sell it today you would earn a total of 1,335 from holding iShares iBoxx High or generate 20.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx High vs. Invesco BulletShares 2024
Performance |
| Timeline |
| iShares iBoxx High |
| Invesco BulletShares 2024 |
IShares IBoxx and Invesco BulletShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Invesco BulletShares
The main advantage of trading using opposite IShares IBoxx and Invesco BulletShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, Invesco BulletShares 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 Invesco BulletShares will offset losses from the drop in Invesco BulletShares' long position.| IShares IBoxx vs. iShares iBoxx Investment | IShares IBoxx vs. SPDR Bloomberg High | IShares IBoxx vs. iShares TIPS Bond | IShares IBoxx vs. iShares 20 Year |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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