Correlation Between IShares IBoxx and IShares IBonds
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and IShares IBonds 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 IShares IBonds 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 iShares iBonds 2028, you can compare the effects of market volatilities on IShares IBoxx and IShares IBonds 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 IShares IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and IShares IBonds.
Diversification Opportunities for IShares IBoxx and IShares IBonds
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and iShares iBonds 2028 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBonds 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 IShares IBonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBonds 2028 has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and IShares IBonds go up and down completely randomly.
Pair Corralation between IShares IBoxx and IShares IBonds
Considering the 90-day investment horizon iShares iBoxx High is expected to generate 0.98 times more return on investment than IShares IBonds. However, iShares iBoxx High is 1.02 times less risky than IShares IBonds. It trades about 0.32 of its potential returns per unit of risk. iShares iBonds 2028 is currently generating about 0.21 per unit of risk. If you would invest 7,903 in iShares iBoxx High on September 13, 2024 and sell it today you would earn a total of 83.00 from holding iShares iBoxx High or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx High vs. iShares iBonds 2028
Performance |
| Timeline |
| iShares iBoxx High |
| iShares iBonds 2028 |
IShares IBoxx and IShares IBonds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and IShares IBonds
The main advantage of trading using opposite IShares IBoxx and IShares IBonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, IShares IBonds 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 IBonds will offset losses from the drop in IShares IBonds' 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 |
| IShares IBonds vs. Rivernorth Opportunistic Municipalome | IShares IBonds vs. MFS Investment Grade | IShares IBonds vs. Blackrock Muniholdings Ny | IShares IBonds vs. Blackrock Muniholdings Closed |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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