Correlation Between IShares IBoxx and BlackRock Intermediate
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and BlackRock Intermediate 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 BlackRock Intermediate 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 BlackRock Intermediate Muni, you can compare the effects of market volatilities on IShares IBoxx and BlackRock Intermediate 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 BlackRock Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and BlackRock Intermediate.
Diversification Opportunities for IShares IBoxx and BlackRock Intermediate
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and BlackRock is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx Investment and BlackRock Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Intermediate 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 BlackRock Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Intermediate has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and BlackRock Intermediate go up and down completely randomly.
Pair Corralation between IShares IBoxx and BlackRock Intermediate
Considering the 90-day investment horizon IShares IBoxx is expected to generate 2.92 times less return on investment than BlackRock Intermediate. In addition to that, IShares IBoxx is 1.82 times more volatile than BlackRock Intermediate Muni. It trades about 0.01 of its total potential returns per unit of risk. BlackRock Intermediate Muni is currently generating about 0.05 per unit of volatility. If you would invest 2,381 in BlackRock Intermediate Muni on September 2, 2024 and sell it today you would earn a total of 17.00 from holding BlackRock Intermediate Muni or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx Investment vs. BlackRock Intermediate Muni
Performance |
| Timeline |
| iShares iBoxx Investment |
| BlackRock Intermediate |
IShares IBoxx and BlackRock Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and BlackRock Intermediate
The main advantage of trading using opposite IShares IBoxx and BlackRock Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, BlackRock Intermediate 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 BlackRock Intermediate will offset losses from the drop in BlackRock Intermediate'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 |
| BlackRock Intermediate vs. BlackRock High Yield | BlackRock Intermediate vs. iShares iBonds Dec | BlackRock Intermediate vs. iShares Short Maturity | BlackRock Intermediate vs. iShares iBonds Dec |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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