Correlation Between IShares Core and IShares IBonds
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares IBonds 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 IBonds 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 iShares iBonds Dec, you can compare the effects of market volatilities on IShares Core and IShares IBonds 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 IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares IBonds.
Diversification Opportunities for IShares Core and IShares IBonds
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and IShares is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and iShares iBonds Dec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBonds Dec 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 IShares IBonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBonds Dec has no effect on the direction of IShares Core i.e., IShares Core and IShares IBonds go up and down completely randomly.
Pair Corralation between IShares Core and IShares IBonds
Considering the 90-day investment horizon iShares Core SP is expected to generate 3.86 times more return on investment than IShares IBonds. However, IShares Core is 3.86 times more volatile than iShares iBonds Dec. It trades about 0.14 of its potential returns per unit of risk. iShares iBonds Dec is currently generating about 0.13 per unit of risk. If you would invest 52,665 in iShares Core SP on September 1, 2024 and sell it today you would earn a total of 7,842 from holding iShares Core SP or generate 14.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares Core SP vs. iShares iBonds Dec
Performance |
| Timeline |
| iShares Core SP |
| iShares iBonds Dec |
IShares Core and IShares IBonds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares IBonds
The main advantage of trading using opposite IShares Core and IShares IBonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares IBonds 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 IBonds will offset losses from the drop in IShares IBonds' 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 |
| IShares IBonds vs. Invesco BulletShares 2025 | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. Invesco BulletShares 2026 |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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