Correlation Between IShares IBoxx and Hartford Municipal
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and Hartford Municipal 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 Hartford Municipal 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 Hartford Municipal Opportunities, you can compare the effects of market volatilities on IShares IBoxx and Hartford Municipal 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 Hartford Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Hartford Municipal.
Diversification Opportunities for IShares IBoxx and Hartford Municipal
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Hartford is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx Investment and Hartford Municipal Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Municipal 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 Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Municipal has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Hartford Municipal go up and down completely randomly.
Pair Corralation between IShares IBoxx and Hartford Municipal
Considering the 90-day investment horizon IShares IBoxx is expected to generate 1.17 times less return on investment than Hartford Municipal. In addition to that, IShares IBoxx is 1.7 times more volatile than Hartford Municipal Opportunities. It trades about 0.08 of its total potential returns per unit of risk. Hartford Municipal Opportunities is currently generating about 0.16 per unit of volatility. If you would invest 3,872 in Hartford Municipal Opportunities on August 31, 2024 and sell it today you would earn a total of 45.00 from holding Hartford Municipal Opportunities or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx Investment vs. Hartford Municipal Opportuniti
Performance |
| Timeline |
| iShares iBoxx Investment |
| Hartford Municipal |
IShares IBoxx and Hartford Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Hartford Municipal
The main advantage of trading using opposite IShares IBoxx and Hartford Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, Hartford Municipal 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 Hartford Municipal will offset losses from the drop in Hartford Municipal'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 |
| Hartford Municipal vs. iShares JP Morgan | Hartford Municipal vs. iShares iBoxx Investment | Hartford Municipal vs. SPDR Nuveen Bloomberg | Hartford Municipal vs. iShares MBS ETF |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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