Correlation Between IShares Core and IShares 10
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares 10 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 10 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 10 20 Year, you can compare the effects of market volatilities on IShares Core and IShares 10 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 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares 10.
Diversification Opportunities for IShares Core and IShares 10
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Total and iShares 10 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 10 20 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 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 10 20 has no effect on the direction of IShares Core i.e., IShares Core and IShares 10 go up and down completely randomly.
Pair Corralation between IShares Core and IShares 10
Given the investment horizon of 90 days iShares Core Total is expected to generate 0.43 times more return on investment than IShares 10. However, iShares Core Total is 2.32 times less risky than IShares 10. It trades about -0.03 of its potential returns per unit of risk. iShares 10 20 Year is currently generating about -0.07 per unit of risk. If you would invest 4,635 in iShares Core Total on August 31, 2024 and sell it today you would lose (30.00) from holding iShares Core Total or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Total vs. iShares 10 20 Year
Performance |
| Timeline |
| iShares Core Total |
| iShares 10 20 |
IShares Core and IShares 10 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares 10
The main advantage of trading using opposite IShares Core and IShares 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares 10 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 10 will offset losses from the drop in IShares 10'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 10 vs. iShares 3 7 Year | IShares 10 vs. iShares Short Treasury | IShares 10 vs. iShares Intermediate GovernmentCredit | IShares 10 vs. iShares GovernmentCredit Bond |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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