Correlation Between IShares Core and IShares Treasury
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares Treasury 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 Core and IShares Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core International and iShares Treasury Bond, you can compare the effects of market volatilities on IShares Core and IShares Treasury 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 Core with a short position of IShares Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares Treasury.
Diversification Opportunities for IShares Core and IShares Treasury
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and IShares is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core International and iShares Treasury Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Bond and IShares Core 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 Core International are associated (or correlated) with IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Bond has no effect on the direction of IShares Core i.e., IShares Core and IShares Treasury go up and down completely randomly.
Pair Corralation between IShares Core and IShares Treasury
Given the investment horizon of 90 days iShares Core International is expected to generate 0.63 times more return on investment than IShares Treasury. However, iShares Core International is 1.59 times less risky than IShares Treasury. It trades about 0.19 of its potential returns per unit of risk. iShares Treasury Bond is currently generating about 0.05 per unit of risk. If you would invest 5,001 in iShares Core International on September 13, 2024 and sell it today you would earn a total of 241.00 from holding iShares Core International or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
iShares Core International vs. iShares Treasury Bond
Performance |
| Timeline |
| iShares Core Interna |
| iShares Treasury Bond |
IShares Core and IShares Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares Treasury
The main advantage of trading using opposite IShares Core and IShares Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares Treasury 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 Treasury will offset losses from the drop in IShares Treasury's long position.| IShares Core vs. Vanguard Total Bond | IShares Core vs. Vanguard Total International | IShares Core vs. Vanguard Emerging Markets | IShares Core vs. Vanguard Short Term Inflation Protected |
| IShares Treasury vs. iShares MBS ETF | IShares Treasury vs. iShares Core Total | IShares Treasury vs. iShares 3 7 Year | IShares Treasury vs. iShares 10 20 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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