Correlation Between IShares IBoxx and IShares Broad
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and IShares Broad 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 Broad 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 Broad USD, you can compare the effects of market volatilities on IShares IBoxx and IShares Broad 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 Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and IShares Broad.
Diversification Opportunities for IShares IBoxx and IShares Broad
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and iShares Broad USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Broad USD 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 Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Broad USD has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and IShares Broad go up and down completely randomly.
Pair Corralation between IShares IBoxx and IShares Broad
Considering the 90-day investment horizon iShares iBoxx High is expected to generate 1.03 times more return on investment than IShares Broad. However, IShares IBoxx is 1.03 times more volatile than iShares Broad USD. It trades about 0.22 of its potential returns per unit of risk. iShares Broad USD is currently generating about 0.22 per unit of risk. If you would invest 7,874 in iShares iBoxx High on August 24, 2024 and sell it today you would earn a total of 77.00 from holding iShares iBoxx High or generate 0.98% 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 Broad USD
Performance |
| Timeline |
| iShares iBoxx High |
| iShares Broad USD |
IShares IBoxx and IShares Broad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and IShares Broad
The main advantage of trading using opposite IShares IBoxx and IShares Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, IShares Broad 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 Broad will offset losses from the drop in IShares Broad's long position.| IShares IBoxx vs. SPDR Bloomberg Short | IShares IBoxx vs. VanEck JP Morgan | IShares IBoxx vs. iShares 0 5 Year |
| IShares Broad vs. SPDR Bloomberg Short | IShares Broad vs. VanEck JP Morgan | IShares Broad vs. iShares 0 5 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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