Correlation Between IShares Core and IShares Short
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares Short 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 Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Total and iShares Short Treasury, you can compare the effects of market volatilities on IShares Core and IShares Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares Short.
Diversification Opportunities for IShares Core and IShares Short
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and IShares is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Total and iShares Short Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Short Treasury 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 Total are associated (or correlated) with IShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Short Treasury has no effect on the direction of IShares Core i.e., IShares Core and IShares Short go up and down completely randomly.
Pair Corralation between IShares Core and IShares Short
Given the investment horizon of 90 days iShares Core Total is expected to under-perform the IShares Short. In addition to that, IShares Core is 17.98 times more volatile than iShares Short Treasury. It trades about -0.03 of its total potential returns per unit of risk. iShares Short Treasury is currently generating about 1.08 per unit of volatility. If you would invest 10,924 in iShares Short Treasury on August 31, 2024 and sell it today you would earn a total of 122.00 from holding iShares Short Treasury or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Total vs. iShares Short Treasury
Performance |
| Timeline |
| iShares Core Total |
| iShares Short Treasury |
IShares Core and IShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares Short
The main advantage of trading using opposite IShares Core and IShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares Short 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 Short will offset losses from the drop in IShares Short's long position.| IShares Core vs. iShares Core 1 5 | IShares Core vs. iShares Core International | IShares Core vs. iShares Treasury Bond | IShares Core vs. iShares 1 5 Year |
| IShares Short vs. SPDR Bloomberg 1 3 | IShares Short vs. iShares 1 3 Year | IShares Short vs. iShares 3 7 Year | IShares Short 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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