Correlation Between IShares 1 and IShares 3
Can any of the company-specific risk be diversified away by investing in both IShares 1 and IShares 3 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 1 and IShares 3 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 1 3 Year and iShares 3 7 Year, you can compare the effects of market volatilities on IShares 1 and IShares 3 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 1 with a short position of IShares 3. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and IShares 3.
Diversification Opportunities for IShares 1 and IShares 3
Very poor diversification
The 3 months correlation between IShares and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 3 Year and iShares 3 7 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 3 7 and IShares 1 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 1 3 Year are associated (or correlated) with IShares 3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 3 7 has no effect on the direction of IShares 1 i.e., IShares 1 and IShares 3 go up and down completely randomly.
Pair Corralation between IShares 1 and IShares 3
Considering the 90-day investment horizon iShares 1 3 Year is expected to generate 0.39 times more return on investment than IShares 3. However, iShares 1 3 Year is 2.55 times less risky than IShares 3. It trades about -0.06 of its potential returns per unit of risk. iShares 3 7 Year is currently generating about -0.12 per unit of risk. If you would invest 8,210 in iShares 1 3 Year on August 27, 2024 and sell it today you would lose (9.00) from holding iShares 1 3 Year or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 1 3 Year vs. iShares 3 7 Year
Performance |
| Timeline |
| iShares 1 3 |
| iShares 3 7 |
IShares 1 and IShares 3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 1 and IShares 3
The main advantage of trading using opposite IShares 1 and IShares 3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 position performs unexpectedly, IShares 3 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 3 will offset losses from the drop in IShares 3's long position.| IShares 1 vs. iShares 7 10 Year | IShares 1 vs. iShares iBoxx Investment | IShares 1 vs. iShares TIPS Bond | IShares 1 vs. iShares 3 7 Year |
| IShares 3 vs. Vanguard Long Term Treasury | IShares 3 vs. Vanguard Short Term Treasury | IShares 3 vs. Vanguard Intermediate Term Corporate | IShares 3 vs. Vanguard Mortgage Backed Securities |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |