Correlation Between IShares IBoxx and Dow Jones
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and Dow Jones 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 IBoxx and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares iBoxx Investment and Dow Jones Industrial, you can compare the effects of market volatilities on IShares IBoxx and Dow Jones 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 IBoxx with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Dow Jones.
Diversification Opportunities for IShares IBoxx and Dow Jones
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Dow is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx Investment and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and IShares IBoxx 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 iBoxx Investment are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Dow Jones go up and down completely randomly.
Pair Corralation between IShares IBoxx and Dow Jones
Considering the 90-day investment horizon iShares iBoxx Investment is expected to under-perform the Dow Jones. But the etf apears to be less risky and, when comparing its historical volatility, iShares iBoxx Investment is 1.98 times less risky than Dow Jones. The etf trades about -0.04 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 135,540 from holding Dow Jones Industrial or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx Investment vs. Dow Jones Industrial
Performance |
| Timeline |
IShares IBoxx and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
iShares iBoxx Investment
Pair trading matchups for IShares IBoxx
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with IShares IBoxx and Dow Jones
The main advantage of trading using opposite IShares IBoxx and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| IShares IBoxx vs. iShares iBoxx High | IShares IBoxx vs. iShares 1 3 Year | IShares IBoxx vs. iShares TIPS Bond | IShares IBoxx vs. iShares 7 10 Year |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |