Correlation Between IShares International and IShares Intermediate
Can any of the company-specific risk be diversified away by investing in both IShares International and IShares Intermediate 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 International and IShares Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares International Developed and iShares Intermediate GovernmentCredit, you can compare the effects of market volatilities on IShares International and IShares Intermediate 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 International with a short position of IShares Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and IShares Intermediate.
Diversification Opportunities for IShares International and IShares Intermediate
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Develope and iShares Intermediate Governmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Intermediate and IShares International 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 International Developed are associated (or correlated) with IShares Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Intermediate has no effect on the direction of IShares International i.e., IShares International and IShares Intermediate go up and down completely randomly.
Pair Corralation between IShares International and IShares Intermediate
Given the investment horizon of 90 days IShares International is expected to generate 1.08 times less return on investment than IShares Intermediate. In addition to that, IShares International is 4.27 times more volatile than iShares Intermediate GovernmentCredit. It trades about 0.05 of its total potential returns per unit of risk. iShares Intermediate GovernmentCredit is currently generating about 0.24 per unit of volatility. If you would invest 10,396 in iShares Intermediate GovernmentCredit on November 30, 2024 and sell it today you would earn a total of 194.00 from holding iShares Intermediate GovernmentCredit or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares International Develope vs. iShares Intermediate Governmen
Performance |
| Timeline |
| iShares International |
| iShares Intermediate |
IShares International and IShares Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and IShares Intermediate
The main advantage of trading using opposite IShares International and IShares Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International position performs unexpectedly, IShares Intermediate 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 Intermediate will offset losses from the drop in IShares Intermediate's long position.| IShares International vs. iShares International Treasury | IShares International vs. iShares 1 3 Year | IShares International vs. SPDR Dow Jones | IShares International vs. iShares MSCI Emerging |
| IShares Intermediate vs. iShares GovernmentCredit Bond | IShares Intermediate vs. iShares Agency Bond | IShares Intermediate vs. iShares New York | IShares Intermediate vs. iShares MBS ETF |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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