Correlation Between IShares Inflation and Invesco
Can any of the company-specific risk be diversified away by investing in both IShares Inflation and Invesco 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 Inflation and Invesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Inflation Hedged and Invesco, you can compare the effects of market volatilities on IShares Inflation and Invesco 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 Inflation with a short position of Invesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Inflation and Invesco.
Diversification Opportunities for IShares Inflation and Invesco
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Invesco is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Inflation Hedged and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco and IShares Inflation 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 Inflation Hedged are associated (or correlated) with Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of IShares Inflation i.e., IShares Inflation and Invesco go up and down completely randomly.
Pair Corralation between IShares Inflation and Invesco
Given the investment horizon of 90 days iShares Inflation Hedged is expected to generate 4.16 times more return on investment than Invesco. However, IShares Inflation is 4.16 times more volatile than Invesco. It trades about 0.06 of its potential returns per unit of risk. Invesco is currently generating about 0.18 per unit of risk. If you would invest 2,394 in iShares Inflation Hedged on August 31, 2024 and sell it today you would earn a total of 227.00 from holding iShares Inflation Hedged or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 8.56% |
| Values | Daily Returns |
iShares Inflation Hedged vs. Invesco
Performance |
| Timeline |
| iShares Inflation Hedged |
| Invesco |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares Inflation and Invesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Inflation and Invesco
The main advantage of trading using opposite IShares Inflation and Invesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Inflation position performs unexpectedly, Invesco 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 will offset losses from the drop in Invesco's long position.| IShares Inflation vs. iShares Interest Rate | IShares Inflation vs. iShares Interest Rate | IShares Inflation vs. iShares Edge Investment | IShares Inflation vs. iShares Interest Rate |
| Invesco vs. iShares Interest Rate | Invesco vs. iShares Interest Rate | Invesco vs. iShares Edge Investment | Invesco vs. iShares Inflation Hedged |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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