Correlation Between IShares Treasury and US Treasury
Can any of the company-specific risk be diversified away by investing in both IShares Treasury and US 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 Treasury and US Treasury 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 US Treasury 30, you can compare the effects of market volatilities on IShares Treasury and US 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 Treasury with a short position of US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and US Treasury.
Diversification Opportunities for IShares Treasury and US Treasury
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and UTHY is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Floating and US Treasury 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 30 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 US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 30 has no effect on the direction of IShares Treasury i.e., IShares Treasury and US Treasury go up and down completely randomly.
Pair Corralation between IShares Treasury and US Treasury
Given the investment horizon of 90 days iShares Treasury Floating is expected to generate 0.02 times more return on investment than US Treasury. However, iShares Treasury Floating is 43.19 times less risky than US Treasury. It trades about 0.89 of its potential returns per unit of risk. US Treasury 30 is currently generating about -0.02 per unit of risk. If you would invest 4,577 in iShares Treasury Floating on August 26, 2024 and sell it today you would earn a total of 483.00 from holding iShares Treasury Floating or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 84.71% |
| Values | Daily Returns |
iShares Treasury Floating vs. US Treasury 30
Performance |
| Timeline |
| iShares Treasury Floating |
| US Treasury 30 |
IShares Treasury and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Treasury and US Treasury
The main advantage of trading using opposite IShares Treasury and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury position performs unexpectedly, US 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 US Treasury will offset losses from the drop in US Treasury's long position.| IShares Treasury vs. First Trust Low | IShares Treasury vs. First Trust Senior | IShares Treasury vs. First Trust TCW | IShares Treasury vs. First Trust Tactical |
| US Treasury vs. iShares Treasury Floating | US Treasury vs. iShares iBonds Dec | US Treasury vs. iShares iBonds Dec | US Treasury vs. iShares 0 3 Month |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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