Correlation Between IShares BBB and IShares BB
Can any of the company-specific risk be diversified away by investing in both IShares BBB and IShares BB 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 BBB and IShares BB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares BBB Rated and iShares BB Rated, you can compare the effects of market volatilities on IShares BBB and IShares BB 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 BBB with a short position of IShares BB. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares BBB and IShares BB.
Diversification Opportunities for IShares BBB and IShares BB
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares BBB Rated and iShares BB Rated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares BB Rated and IShares BBB 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 BBB Rated are associated (or correlated) with IShares BB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares BB Rated has no effect on the direction of IShares BBB i.e., IShares BBB and IShares BB go up and down completely randomly.
Pair Corralation between IShares BBB and IShares BB
Given the investment horizon of 90 days IShares BBB is expected to generate 1.34 times less return on investment than IShares BB. In addition to that, IShares BBB is 1.3 times more volatile than iShares BB Rated. It trades about 0.08 of its total potential returns per unit of risk. iShares BB Rated is currently generating about 0.14 per unit of volatility. If you would invest 4,249 in iShares BB Rated on August 26, 2024 and sell it today you would earn a total of 411.00 from holding iShares BB Rated or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares BBB Rated vs. iShares BB Rated
Performance |
| Timeline |
| iShares BBB Rated |
| iShares BB Rated |
IShares BBB and IShares BB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares BBB and IShares BB
The main advantage of trading using opposite IShares BBB and IShares BB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares BBB position performs unexpectedly, IShares BB 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 IShares BB will offset losses from the drop in IShares BB's long position.| IShares BBB vs. iShares BB Rated | IShares BBB vs. iShares Aaa | IShares BBB vs. iShares Edge Investment | IShares BBB vs. BlackRock Intermediate Muni |
| IShares BB vs. First Trust Senior | IShares BB vs. First Trust Low | IShares BB vs. First Trust Enhanced | IShares BB vs. First Trust TCW |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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