Correlation Between IShares 20 and IShares IBoxx
Can any of the company-specific risk be diversified away by investing in both IShares 20 and IShares IBoxx 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 IBoxx 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 iBoxx High, you can compare the effects of market volatilities on IShares 20 and IShares IBoxx 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 IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 20 and IShares IBoxx.
Diversification Opportunities for IShares 20 and IShares IBoxx
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding iShares 20 Year and iShares iBoxx High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBoxx High 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 IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBoxx High has no effect on the direction of IShares 20 i.e., IShares 20 and IShares IBoxx go up and down completely randomly.
Pair Corralation between IShares 20 and IShares IBoxx
Considering the 90-day investment horizon iShares 20 Year is expected to under-perform the IShares IBoxx. In addition to that, IShares 20 is 4.54 times more volatile than iShares iBoxx High. It trades about -0.14 of its total potential returns per unit of risk. iShares iBoxx High is currently generating about 0.01 per unit of volatility. If you would invest 7,957 in iShares iBoxx High on August 28, 2024 and sell it today you would earn a total of 7.00 from holding iShares iBoxx High or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 20 Year vs. iShares iBoxx High
Performance |
| Timeline |
| iShares 20 Year |
| iShares iBoxx High |
IShares 20 and IShares IBoxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 20 and IShares IBoxx
The main advantage of trading using opposite IShares 20 and IShares IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 20 position performs unexpectedly, IShares IBoxx 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 IBoxx will offset losses from the drop in IShares IBoxx's long position.| IShares 20 vs. iShares 7 10 Year | IShares 20 vs. iShares 1 3 Year | IShares 20 vs. iShares Russell 2000 | IShares 20 vs. iShares iBoxx Investment |
| IShares IBoxx vs. First Trust Senior | IShares IBoxx vs. First Trust Low | IShares IBoxx vs. First Trust Enhanced | IShares IBoxx vs. First Trust TCW |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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