Correlation Between IShares BBB and Vident Core
Can any of the company-specific risk be diversified away by investing in both IShares BBB and Vident Core 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 Vident Core 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 Vident Core Bond, you can compare the effects of market volatilities on IShares BBB and Vident Core 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 Vident Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares BBB and Vident Core.
Diversification Opportunities for IShares BBB and Vident Core
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Vident is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares BBB Rated and Vident Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vident Core Bond 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 Vident Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vident Core Bond has no effect on the direction of IShares BBB i.e., IShares BBB and Vident Core go up and down completely randomly.
Pair Corralation between IShares BBB and Vident Core
Given the investment horizon of 90 days iShares BBB Rated is expected to generate 1.08 times more return on investment than Vident Core. However, IShares BBB is 1.08 times more volatile than Vident Core Bond. It trades about 0.16 of its potential returns per unit of risk. Vident Core Bond is currently generating about 0.13 per unit of risk. If you would invest 8,596 in iShares BBB Rated on September 3, 2024 and sell it today you would earn a total of 119.00 from holding iShares BBB Rated or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares BBB Rated vs. Vident Core Bond
Performance |
| Timeline |
| iShares BBB Rated |
| Vident Core Bond |
IShares BBB and Vident Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares BBB and Vident Core
The main advantage of trading using opposite IShares BBB and Vident Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares BBB position performs unexpectedly, Vident Core 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 Vident Core will offset losses from the drop in Vident Core's long position.| IShares BBB vs. iShares iBoxx High | IShares BBB vs. iShares 1 3 Year | IShares BBB vs. iShares TIPS Bond | IShares BBB vs. iShares 7 10 Year |
| Vident Core vs. Vident Core Equity | Vident Core vs. Vident International Equity | Vident Core vs. Invesco Variable Rate | Vident Core vs. FlexShares Credit Scored Corporate |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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