Correlation Between IShares Short and X Square
Can any of the company-specific risk be diversified away by investing in both IShares Short and X Square 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 Short and X Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Short Maturity and X Square Series Trust, you can compare the effects of market volatilities on IShares Short and X Square 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 Short with a short position of X Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and X Square.
Diversification Opportunities for IShares Short and X Square
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and ZTAX is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Maturity and X Square Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Square Series and IShares Short 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 Short Maturity are associated (or correlated) with X Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Square Series has no effect on the direction of IShares Short i.e., IShares Short and X Square go up and down completely randomly.
Pair Corralation between IShares Short and X Square
Given the investment horizon of 90 days IShares Short is expected to generate 5.19 times less return on investment than X Square. But when comparing it to its historical volatility, iShares Short Maturity is 21.61 times less risky than X Square. It trades about 0.14 of its potential returns per unit of risk. X Square Series Trust is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,672 in X Square Series Trust on August 25, 2024 and sell it today you would earn a total of 48.00 from holding X Square Series Trust or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Short Maturity vs. X Square Series Trust
Performance |
| Timeline |
| iShares Short Maturity |
| X Square Series |
IShares Short and X Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Short and X Square
The main advantage of trading using opposite IShares Short and X Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short position performs unexpectedly, X Square 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 X Square will offset losses from the drop in X Square's long position.| IShares Short vs. iShares Treasury Floating | IShares Short vs. iShares Short Term National | IShares Short vs. iShares Short Maturity | IShares Short vs. iShares Interest Rate |
| X Square vs. SSGA Active Trust | X Square vs. SPDR Nuveen Municipal | X Square vs. Xtrackers California Municipal | X Square vs. iShares Short Maturity |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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