Correlation Between Cabana Target and IShares Convertible
Can any of the company-specific risk be diversified away by investing in both Cabana Target and IShares Convertible 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 Cabana Target and IShares Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cabana Target Drawdown and iShares Convertible Bond, you can compare the effects of market volatilities on Cabana Target and IShares Convertible 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 Cabana Target with a short position of IShares Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabana Target and IShares Convertible.
Diversification Opportunities for Cabana Target and IShares Convertible
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cabana and IShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cabana Target Drawdown and iShares Convertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Convertible Bond and Cabana Target 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 Cabana Target Drawdown are associated (or correlated) with IShares Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Convertible Bond has no effect on the direction of Cabana Target i.e., Cabana Target and IShares Convertible go up and down completely randomly.
Pair Corralation between Cabana Target and IShares Convertible
Given the investment horizon of 90 days Cabana Target is expected to generate 1.6 times less return on investment than IShares Convertible. In addition to that, Cabana Target is 1.1 times more volatile than iShares Convertible Bond. It trades about 0.12 of its total potential returns per unit of risk. iShares Convertible Bond is currently generating about 0.21 per unit of volatility. If you would invest 7,759 in iShares Convertible Bond on September 1, 2024 and sell it today you would earn a total of 1,169 from holding iShares Convertible Bond or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Cabana Target Drawdown vs. iShares Convertible Bond
Performance |
| Timeline |
| Cabana Target Drawdown |
| iShares Convertible Bond |
Cabana Target and IShares Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cabana Target and IShares Convertible
The main advantage of trading using opposite Cabana Target and IShares Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabana Target position performs unexpectedly, IShares Convertible 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 Convertible will offset losses from the drop in IShares Convertible's long position.| Cabana Target vs. Cambria Global Asset | Cabana Target vs. Cambria Global Value | Cabana Target vs. Cambria Foreign Shareholder | Cabana Target vs. Cambria Value and |
| IShares Convertible vs. VanEck Vectors Moodys | IShares Convertible vs. BondBloxx ETF Trust | IShares Convertible vs. Vanguard ESG Corporate | IShares Convertible vs. Vanguard Intermediate Term Corporate |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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