Correlation Between IShares 20 and IShares Treasury
Can any of the company-specific risk be diversified away by investing in both IShares 20 and IShares 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 20 and IShares Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 20 Year and iShares Treasury Bond, you can compare the effects of market volatilities on IShares 20 and IShares 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 20 with a short position of IShares Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 20 and IShares Treasury.
Diversification Opportunities for IShares 20 and IShares Treasury
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares 20 Year and iShares Treasury Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Bond and IShares 20 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 20 Year are associated (or correlated) with IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Bond has no effect on the direction of IShares 20 i.e., IShares 20 and IShares Treasury go up and down completely randomly.
Pair Corralation between IShares 20 and IShares Treasury
Considering the 90-day investment horizon iShares 20 Year is expected to under-perform the IShares Treasury. In addition to that, IShares 20 is 2.69 times more volatile than iShares Treasury Bond. It trades about 0.0 of its total potential returns per unit of risk. iShares Treasury Bond is currently generating about 0.04 per unit of volatility. If you would invest 2,212 in iShares Treasury Bond on August 27, 2024 and sell it today you would earn a total of 52.00 from holding iShares Treasury Bond or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 20 Year vs. iShares Treasury Bond
Performance |
| Timeline |
| iShares 20 Year |
| iShares Treasury Bond |
IShares 20 and IShares Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 20 and IShares Treasury
The main advantage of trading using opposite IShares 20 and IShares Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 20 position performs unexpectedly, IShares 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 IShares Treasury will offset losses from the drop in IShares Treasury's long position.| IShares 20 vs. iShares Treasury Floating | IShares 20 vs. iShares iBonds Dec | IShares 20 vs. iShares iBonds Dec | IShares 20 vs. iShares 0 3 Month |
| IShares Treasury vs. iShares MBS ETF | IShares Treasury vs. iShares Core Total | IShares Treasury vs. iShares 3 7 Year | IShares Treasury vs. iShares 10 20 Year |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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