Correlation Between IShares IBoxx and IShares Aaa
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and IShares Aaa 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 Aaa 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 Aaa , you can compare the effects of market volatilities on IShares IBoxx and IShares Aaa 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 Aaa. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and IShares Aaa.
Diversification Opportunities for IShares IBoxx and IShares Aaa
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and iShares Aaa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Aaa 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 Aaa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Aaa has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and IShares Aaa go up and down completely randomly.
Pair Corralation between IShares IBoxx and IShares Aaa
Considering the 90-day investment horizon iShares iBoxx High is expected to generate 0.9 times more return on investment than IShares Aaa. However, iShares iBoxx High is 1.11 times less risky than IShares Aaa. It trades about 0.09 of its potential returns per unit of risk. iShares Aaa is currently generating about 0.04 per unit of risk. If you would invest 6,712 in iShares iBoxx High on September 4, 2024 and sell it today you would earn a total of 1,253 from holding iShares iBoxx High or generate 18.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx High vs. iShares Aaa
Performance |
| Timeline |
| iShares iBoxx High |
| iShares Aaa |
IShares IBoxx and IShares Aaa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and IShares Aaa
The main advantage of trading using opposite IShares IBoxx and IShares Aaa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, IShares Aaa 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 Aaa will offset losses from the drop in IShares Aaa's 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 Aaa vs. iShares iBoxx High | IShares Aaa vs. iShares 1 3 Year | IShares Aaa vs. iShares TIPS Bond | IShares Aaa vs. iShares 7 10 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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