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 2028, 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
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Invesco is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and Invesco BulletShares 2028 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2028 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 2028 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 is expected to generate 4.4 times less return on investment than Invesco BulletShares. But when comparing it to its historical volatility, iShares iBoxx High is 1.33 times less risky than Invesco BulletShares. It trades about 0.02 of its potential returns per unit of risk. Invesco BulletShares 2028 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,177 in Invesco BulletShares 2028 on August 25, 2024 and sell it today you would earn a total of 20.00 from holding Invesco BulletShares 2028 or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx High vs. Invesco BulletShares 2028
Performance |
| Timeline |
| iShares iBoxx High |
| Invesco BulletShares 2028 |
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. First Trust Senior | IShares IBoxx vs. First Trust Low | IShares IBoxx vs. First Trust Enhanced | IShares IBoxx vs. First Trust TCW |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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