Correlation Between IShares IBoxx and Fidelity Investment
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and Fidelity Investment 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 Fidelity Investment 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 Fidelity Investment Grade, you can compare the effects of market volatilities on IShares IBoxx and Fidelity Investment 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 Fidelity Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Fidelity Investment.
Diversification Opportunities for IShares IBoxx and Fidelity Investment
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx Investment and Fidelity Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Investment Grade 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 Fidelity Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Investment Grade has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Fidelity Investment go up and down completely randomly.
Pair Corralation between IShares IBoxx and Fidelity Investment
Considering the 90-day investment horizon iShares iBoxx Investment is expected to generate 1.46 times more return on investment than Fidelity Investment. However, IShares IBoxx is 1.46 times more volatile than Fidelity Investment Grade. It trades about -0.04 of its potential returns per unit of risk. Fidelity Investment Grade is currently generating about -0.08 per unit of risk. If you would invest 10,892 in iShares iBoxx Investment on August 26, 2024 and sell it today you would lose (52.00) from holding iShares iBoxx Investment or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx Investment vs. Fidelity Investment Grade
Performance |
| Timeline |
| iShares iBoxx Investment |
| Fidelity Investment Grade |
IShares IBoxx and Fidelity Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Fidelity Investment
The main advantage of trading using opposite IShares IBoxx and Fidelity Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, Fidelity Investment 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 Fidelity Investment will offset losses from the drop in Fidelity Investment's 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 |
| Fidelity Investment vs. iShares MSCI EAFE | Fidelity Investment vs. iShares iBoxx Investment | Fidelity Investment vs. iShares TIPS Bond | Fidelity Investment vs. iShares 1 3 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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