Correlation Between IShares 20 and US Treasury
Can any of the company-specific risk be diversified away by investing in both IShares 20 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 20 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 20 Year and US Treasury 30, you can compare the effects of market volatilities on IShares 20 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 20 with a short position of US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 20 and US Treasury.
Diversification Opportunities for IShares 20 and US Treasury
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and UTHY is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares 20 Year 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 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 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 20 i.e., IShares 20 and US Treasury go up and down completely randomly.
Pair Corralation between IShares 20 and US Treasury
Considering the 90-day investment horizon iShares 20 Year is expected to generate 1.03 times more return on investment than US Treasury. However, IShares 20 is 1.03 times more volatile than US Treasury 30. It trades about -0.02 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 9,941 in iShares 20 Year on August 26, 2024 and sell it today you would lose (902.00) from holding iShares 20 Year or give up 9.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 20 Year vs. US Treasury 30
Performance |
| Timeline |
| iShares 20 Year |
| US Treasury 30 |
IShares 20 and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 20 and US Treasury
The main advantage of trading using opposite IShares 20 and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 20 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 20 vs. iShares Treasury Floating | IShares 20 vs. iShares iBonds Dec | IShares 20 vs. iShares iBonds Dec | IShares 20 vs. iShares 0 3 Month |
| 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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