Correlation Between IShares 1 and IShares 10
Can any of the company-specific risk be diversified away by investing in both IShares 1 and IShares 10 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 10 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 10 20 Year, you can compare the effects of market volatilities on IShares 1 and IShares 10 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 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and IShares 10.
Diversification Opportunities for IShares 1 and IShares 10
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 3 Year and iShares 10 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 10 20 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 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 10 20 has no effect on the direction of IShares 1 i.e., IShares 1 and IShares 10 go up and down completely randomly.
Pair Corralation between IShares 1 and IShares 10
Considering the 90-day investment horizon iShares 1 3 Year is expected to generate 0.11 times more return on investment than IShares 10. However, iShares 1 3 Year is 8.89 times less risky than IShares 10. It trades about 0.07 of its potential returns per unit of risk. iShares 10 20 Year is currently generating about -0.01 per unit of risk. If you would invest 8,186 in iShares 1 3 Year on September 5, 2024 and sell it today you would earn a total of 20.00 from holding iShares 1 3 Year or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.62% |
| Values | Daily Returns |
iShares 1 3 Year vs. iShares 10 20 Year
Performance |
| Timeline |
| iShares 1 3 |
| iShares 10 20 |
IShares 1 and IShares 10 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 1 and IShares 10
The main advantage of trading using opposite IShares 1 and IShares 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 position performs unexpectedly, IShares 10 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 10 will offset losses from the drop in IShares 10'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 10 vs. iShares 3 7 Year | IShares 10 vs. iShares Short Treasury | IShares 10 vs. iShares Intermediate GovernmentCredit | IShares 10 vs. iShares GovernmentCredit Bond |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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