Correlation Between IShares IBoxx and Invesco Fundamental
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and Invesco Fundamental 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 Invesco Fundamental 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 Invesco Fundamental Investment, you can compare the effects of market volatilities on IShares IBoxx and Invesco Fundamental 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 Invesco Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Invesco Fundamental.
Diversification Opportunities for IShares IBoxx and Invesco Fundamental
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Invesco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx Investment and Invesco Fundamental Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Fundamental 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 Invesco Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Fundamental has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Invesco Fundamental go up and down completely randomly.
Pair Corralation between IShares IBoxx and Invesco Fundamental
Considering the 90-day investment horizon iShares iBoxx Investment is expected to generate 1.98 times more return on investment than Invesco Fundamental. However, IShares IBoxx is 1.98 times more volatile than Invesco Fundamental Investment. It trades about 0.19 of its potential returns per unit of risk. Invesco Fundamental Investment is currently generating about 0.28 per unit of risk. If you would invest 10,639 in iShares iBoxx Investment on November 18, 2024 and sell it today you would earn a total of 160.00 from holding iShares iBoxx Investment or generate 1.5% 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. Invesco Fundamental Investment
Performance |
| Timeline |
| iShares iBoxx Investment |
| Invesco Fundamental |
IShares IBoxx and Invesco Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Invesco Fundamental
The main advantage of trading using opposite IShares IBoxx and Invesco Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, Invesco Fundamental 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 Invesco Fundamental will offset losses from the drop in Invesco Fundamental'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 |
| Invesco Fundamental vs. Invesco International Corporate | Invesco Fundamental vs. Invesco New York | Invesco Fundamental vs. Invesco Global Short | Invesco Fundamental vs. Invesco California AMT Free |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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