Correlation Between IShares Convertible and Invesco Senior
Can any of the company-specific risk be diversified away by investing in both IShares Convertible and Invesco Senior 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 Convertible and Invesco Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Convertible Bond and Invesco Senior Loan, you can compare the effects of market volatilities on IShares Convertible and Invesco Senior 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 Convertible with a short position of Invesco Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Convertible and Invesco Senior.
Diversification Opportunities for IShares Convertible and Invesco Senior
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Invesco is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Convertible Bond and Invesco Senior Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Senior Loan and IShares Convertible 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 Convertible Bond are associated (or correlated) with Invesco Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Senior Loan has no effect on the direction of IShares Convertible i.e., IShares Convertible and Invesco Senior go up and down completely randomly.
Pair Corralation between IShares Convertible and Invesco Senior
Given the investment horizon of 90 days iShares Convertible Bond is expected to generate 5.15 times more return on investment than Invesco Senior. However, IShares Convertible is 5.15 times more volatile than Invesco Senior Loan. It trades about 0.55 of its potential returns per unit of risk. Invesco Senior Loan is currently generating about 0.54 per unit of risk. If you would invest 8,382 in iShares Convertible Bond on September 1, 2024 and sell it today you would earn a total of 546.00 from holding iShares Convertible Bond or generate 6.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Convertible Bond vs. Invesco Senior Loan
Performance |
| Timeline |
| iShares Convertible Bond |
| Invesco Senior Loan |
IShares Convertible and Invesco Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Convertible and Invesco Senior
The main advantage of trading using opposite IShares Convertible and Invesco Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Convertible position performs unexpectedly, Invesco Senior 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 Invesco Senior will offset losses from the drop in Invesco Senior's long position.| IShares Convertible vs. VanEck Vectors Moodys | IShares Convertible vs. BondBloxx ETF Trust | IShares Convertible vs. Vanguard ESG Corporate | IShares Convertible vs. Vanguard Intermediate Term Corporate |
| Invesco Senior vs. VanEck Vectors Moodys | Invesco Senior vs. BondBloxx ETF Trust | Invesco Senior vs. Vanguard ESG Corporate | Invesco Senior vs. Vanguard Intermediate Term Corporate |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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