Correlation Between IShares IBonds and IShares 20
Can any of the company-specific risk be diversified away by investing in both IShares IBonds and IShares 20 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 IBonds and IShares 20 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares iBonds Dec and iShares 20 Year, you can compare the effects of market volatilities on IShares IBonds and IShares 20 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 IBonds with a short position of IShares 20. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBonds and IShares 20.
Diversification Opportunities for IShares IBonds and IShares 20
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBonds Dec and iShares 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 20 Year and IShares IBonds 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 iBonds Dec are associated (or correlated) with IShares 20. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 20 Year has no effect on the direction of IShares IBonds i.e., IShares IBonds and IShares 20 go up and down completely randomly.
Pair Corralation between IShares IBonds and IShares 20
Given the investment horizon of 90 days IShares IBonds is expected to generate 1.59 times less return on investment than IShares 20. But when comparing it to its historical volatility, iShares iBonds Dec is 5.61 times less risky than IShares 20. It trades about 0.16 of its potential returns per unit of risk. iShares 20 Year is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,868 in iShares 20 Year on August 29, 2024 and sell it today you would earn a total of 433.00 from holding iShares 20 Year or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBonds Dec vs. iShares 20 Year
Performance |
| Timeline |
| iShares iBonds Dec |
| iShares 20 Year |
IShares IBonds and IShares 20 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBonds and IShares 20
The main advantage of trading using opposite IShares IBonds and IShares 20 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBonds position performs unexpectedly, IShares 20 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 20 will offset losses from the drop in IShares 20's long position.| IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec |
| IShares 20 vs. iShares 7 10 Year | IShares 20 vs. iShares 1 3 Year | IShares 20 vs. iShares Russell 2000 | IShares 20 vs. iShares iBoxx Investment |
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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