Correlation Between IShares BBB and TCW ETF
Can any of the company-specific risk be diversified away by investing in both IShares BBB and TCW ETF 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 TCW ETF 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 TCW ETF Trust, you can compare the effects of market volatilities on IShares BBB and TCW ETF 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 TCW ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares BBB and TCW ETF.
Diversification Opportunities for IShares BBB and TCW ETF
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and TCW is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares BBB Rated and TCW ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCW ETF Trust 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 TCW ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCW ETF Trust has no effect on the direction of IShares BBB i.e., IShares BBB and TCW ETF go up and down completely randomly.
Pair Corralation between IShares BBB and TCW ETF
Given the investment horizon of 90 days IShares BBB is expected to generate 5.04 times less return on investment than TCW ETF. But when comparing it to its historical volatility, iShares BBB Rated is 1.2 times less risky than TCW ETF. It trades about 0.04 of its potential returns per unit of risk. TCW ETF Trust is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,016 in TCW ETF Trust on October 25, 2024 and sell it today you would earn a total of 33.00 from holding TCW ETF Trust or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
iShares BBB Rated vs. TCW ETF Trust
Performance |
| Timeline |
| iShares BBB Rated |
| TCW ETF Trust |
IShares BBB and TCW ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares BBB and TCW ETF
The main advantage of trading using opposite IShares BBB and TCW ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares BBB position performs unexpectedly, TCW ETF 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 TCW ETF will offset losses from the drop in TCW ETF'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 |
| TCW ETF vs. BondBloxx ETF Trust | TCW ETF vs. Virtus ETF Trust | TCW ETF vs. Virtus ETF Trust | TCW ETF vs. WisdomTree Emerging Markets |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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