Correlation Between IShares Short and IShares Treasury
Can any of the company-specific risk be diversified away by investing in both IShares Short and IShares Treasury 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 IShares Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Short Treasury and iShares Treasury Floating, you can compare the effects of market volatilities on IShares Short and IShares Treasury 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 IShares Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and IShares Treasury.
Diversification Opportunities for IShares Short and IShares Treasury
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Treasury and iShares Treasury Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Floating 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 Treasury are associated (or correlated) with IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Floating has no effect on the direction of IShares Short i.e., IShares Short and IShares Treasury go up and down completely randomly.
Pair Corralation between IShares Short and IShares Treasury
Considering the 90-day investment horizon IShares Short is expected to generate 1.26 times less return on investment than IShares Treasury. But when comparing it to its historical volatility, iShares Short Treasury is 1.02 times less risky than IShares Treasury. It trades about 0.99 of its potential returns per unit of risk. iShares Treasury Floating is currently generating about 1.22 of returns per unit of risk over similar time horizon. If you would invest 5,039 in iShares Treasury Floating on August 28, 2024 and sell it today you would earn a total of 22.00 from holding iShares Treasury Floating or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Short Treasury vs. iShares Treasury Floating
Performance |
| Timeline |
| iShares Short Treasury |
| iShares Treasury Floating |
IShares Short and IShares Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Short and IShares Treasury
The main advantage of trading using opposite IShares Short and IShares Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short position performs unexpectedly, IShares Treasury 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 Treasury will offset losses from the drop in IShares Treasury's long position.| IShares Short vs. SPDR Bloomberg 1 3 | IShares Short vs. iShares 1 3 Year | IShares Short vs. iShares 3 7 Year | IShares Short vs. iShares 10 20 Year |
| IShares Treasury vs. First Trust Low | IShares Treasury vs. First Trust Senior | IShares Treasury vs. First Trust TCW | IShares Treasury vs. First Trust Tactical |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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