Correlation Between IShares Treasury and IShares Interest
Can any of the company-specific risk be diversified away by investing in both IShares Treasury and IShares Interest 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 Treasury and IShares Interest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Treasury Floating and iShares Interest Rate, you can compare the effects of market volatilities on IShares Treasury and IShares Interest 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 Treasury with a short position of IShares Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and IShares Interest.
Diversification Opportunities for IShares Treasury and IShares Interest
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Floating and iShares Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Interest Rate and IShares Treasury 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 Treasury Floating are associated (or correlated) with IShares Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Interest Rate has no effect on the direction of IShares Treasury i.e., IShares Treasury and IShares Interest go up and down completely randomly.
Pair Corralation between IShares Treasury and IShares Interest
Given the investment horizon of 90 days IShares Treasury is expected to generate 1.92 times less return on investment than IShares Interest. But when comparing it to its historical volatility, iShares Treasury Floating is 12.48 times less risky than IShares Interest. It trades about 0.96 of its potential returns per unit of risk. iShares Interest Rate is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,135 in iShares Interest Rate on September 12, 2024 and sell it today you would earn a total of 311.00 from holding iShares Interest Rate or generate 14.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Treasury Floating vs. iShares Interest Rate
Performance |
| Timeline |
| iShares Treasury Floating |
| iShares Interest Rate |
IShares Treasury and IShares Interest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Treasury and IShares Interest
The main advantage of trading using opposite IShares Treasury and IShares Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury position performs unexpectedly, IShares Interest 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 Interest will offset losses from the drop in IShares Interest's long position.| IShares Treasury vs. SPDR Bloomberg Investment | IShares Treasury vs. iShares 0 3 Month | IShares Treasury vs. SPDR Barclays Short | IShares Treasury vs. SPDR Bloomberg 1 3 |
| IShares Interest vs. iShares Treasury Floating | IShares Interest vs. SPDR Bloomberg Investment | IShares Interest vs. iShares 0 3 Month | IShares Interest vs. SPDR Barclays Short |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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