Correlation Between IShares IBoxx and Virtus ETF
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and Virtus ETF 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 Virtus ETF 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 Virtus ETF Trust, you can compare the effects of market volatilities on IShares IBoxx and Virtus ETF 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 Virtus ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Virtus ETF.
Diversification Opportunities for IShares IBoxx and Virtus ETF
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Virtus is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust 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 Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Virtus ETF go up and down completely randomly.
Pair Corralation between IShares IBoxx and Virtus ETF
Considering the 90-day investment horizon IShares IBoxx is expected to generate 1.16 times less return on investment than Virtus ETF. But when comparing it to its historical volatility, iShares iBoxx High is 1.55 times less risky than Virtus ETF. It trades about 0.24 of its potential returns per unit of risk. Virtus ETF Trust is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,564 in Virtus ETF Trust on September 3, 2024 and sell it today you would earn a total of 203.00 from holding Virtus ETF Trust or generate 7.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx High vs. Virtus ETF Trust
Performance |
| Timeline |
| iShares iBoxx High |
| Virtus ETF Trust |
IShares IBoxx and Virtus ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Virtus ETF
The main advantage of trading using opposite IShares IBoxx and Virtus ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, Virtus ETF 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 Virtus ETF will offset losses from the drop in Virtus ETF'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 |
| Virtus ETF vs. iShares iBoxx Investment | Virtus ETF vs. iShares iBoxx High | Virtus ETF vs. iShares National Muni | Virtus ETF vs. Invesco Emerging Markets |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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