Correlation Between IShares Broad and IShares IBonds
Can any of the company-specific risk be diversified away by investing in both IShares Broad and IShares IBonds 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 Broad and IShares IBonds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Broad USD and iShares iBonds 2027, you can compare the effects of market volatilities on IShares Broad and IShares IBonds 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 Broad with a short position of IShares IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Broad and IShares IBonds.
Diversification Opportunities for IShares Broad and IShares IBonds
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares Broad USD and iShares iBonds 2027 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBonds 2027 and IShares Broad 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 Broad USD are associated (or correlated) with IShares IBonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBonds 2027 has no effect on the direction of IShares Broad i.e., IShares Broad and IShares IBonds go up and down completely randomly.
Pair Corralation between IShares Broad and IShares IBonds
Given the investment horizon of 90 days iShares Broad USD is expected to generate 1.14 times more return on investment than IShares IBonds. However, IShares Broad is 1.14 times more volatile than iShares iBonds 2027. It trades about 0.14 of its potential returns per unit of risk. iShares iBonds 2027 is currently generating about 0.11 per unit of risk. If you would invest 3,706 in iShares Broad USD on August 29, 2024 and sell it today you would earn a total of 25.00 from holding iShares Broad USD or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Broad USD vs. iShares iBonds 2027
Performance |
| Timeline |
| iShares Broad USD |
| iShares iBonds 2027 |
IShares Broad and IShares IBonds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Broad and IShares IBonds
The main advantage of trading using opposite IShares Broad and IShares IBonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Broad position performs unexpectedly, IShares IBonds 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 IBonds will offset losses from the drop in IShares IBonds' long position.| IShares Broad vs. Xtrackers USD High | IShares Broad vs. iShares 0 5 Year | IShares Broad vs. iShares Broad USD | IShares Broad vs. Global X Preferred |
| IShares IBonds vs. iShares iBonds 2026 | IShares IBonds vs. iShares iBonds 2025 | IShares IBonds vs. iShares iBonds 2024 | IShares IBonds vs. iShares iBonds 2028 |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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