Correlation Between IShares Short and IShares 1
Can any of the company-specific risk be diversified away by investing in both IShares Short and IShares 1 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 Short and IShares 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Short Term and iShares 1 10Yr Laddered, you can compare the effects of market volatilities on IShares Short and IShares 1 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 Short with a short position of IShares 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and IShares 1.
Diversification Opportunities for IShares Short and IShares 1
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Term and iShares 1 10Yr Laddered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 10Yr and IShares Short 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 Short Term are associated (or correlated) with IShares 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 10Yr has no effect on the direction of IShares Short i.e., IShares Short and IShares 1 go up and down completely randomly.
Pair Corralation between IShares Short and IShares 1
Assuming the 90 days trading horizon IShares Short is expected to generate 1.15 times less return on investment than IShares 1. But when comparing it to its historical volatility, iShares Short Term is 1.26 times less risky than IShares 1. It trades about 0.25 of its potential returns per unit of risk. iShares 1 10Yr Laddered is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,764 in iShares 1 10Yr Laddered on September 4, 2024 and sell it today you would earn a total of 25.00 from holding iShares 1 10Yr Laddered or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Short Term vs. iShares 1 10Yr Laddered
Performance |
| Timeline |
| iShares Short Term |
| iShares 1 10Yr |
IShares Short and IShares 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Short and IShares 1
The main advantage of trading using opposite IShares Short and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short position performs unexpectedly, IShares 1 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 1 will offset losses from the drop in IShares 1's long position.| IShares Short vs. iShares Conservative Short | IShares Short vs. iShares Conservative Strategic | IShares Short vs. iShares Floating Rate | IShares Short vs. iShares High Quality |
| IShares 1 vs. iShares Canadian Government | IShares 1 vs. iShares Canadian Short | IShares 1 vs. iShares Core Canadian | IShares 1 vs. iShares Canadian Real |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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