Correlation Between IShares Core and IPath Bloomberg
Can any of the company-specific risk be diversified away by investing in both IShares Core and IPath Bloomberg 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 IPath Bloomberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and IPath Bloomberg Cotton, you can compare the effects of market volatilities on IShares Core and IPath Bloomberg 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 IPath Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IPath Bloomberg.
Diversification Opportunities for IShares Core and IPath Bloomberg
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IPath is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and IPath Bloomberg Cotton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPath Bloomberg Cotton 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 SP are associated (or correlated) with IPath Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPath Bloomberg Cotton has no effect on the direction of IShares Core i.e., IShares Core and IPath Bloomberg go up and down completely randomly.
Pair Corralation between IShares Core and IPath Bloomberg
Considering the 90-day investment horizon iShares Core SP is expected to generate 1.46 times more return on investment than IPath Bloomberg. However, IShares Core is 1.46 times more volatile than IPath Bloomberg Cotton. It trades about 0.11 of its potential returns per unit of risk. IPath Bloomberg Cotton is currently generating about 0.05 per unit of risk. If you would invest 38,936 in iShares Core SP on September 4, 2024 and sell it today you would earn a total of 21,760 from holding iShares Core SP or generate 55.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.51% |
| Values | Daily Returns |
iShares Core SP vs. IPath Bloomberg Cotton
Performance |
| Timeline |
| iShares Core SP |
| IPath Bloomberg Cotton |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares Core and IPath Bloomberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IPath Bloomberg
The main advantage of trading using opposite IShares Core and IPath Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IPath Bloomberg 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 IPath Bloomberg will offset losses from the drop in IPath Bloomberg's long position.| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP 500 | IShares Core vs. iShares Russell 2000 |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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