Correlation Between Principal Active and IShares IBoxx
Can any of the company-specific risk be diversified away by investing in both Principal Active 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 Principal Active and IShares IBoxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Principal Active High and iShares iBoxx High, you can compare the effects of market volatilities on Principal Active 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 Principal Active with a short position of IShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Active and IShares IBoxx.
Diversification Opportunities for Principal Active and IShares IBoxx
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Principal and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Principal Active High 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 Principal Active 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 Principal Active High 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 Principal Active i.e., Principal Active and IShares IBoxx go up and down completely randomly.
Pair Corralation between Principal Active and IShares IBoxx
Considering the 90-day investment horizon Principal Active High is expected to generate 0.97 times more return on investment than IShares IBoxx. However, Principal Active High is 1.03 times less risky than IShares IBoxx. It trades about 0.3 of its potential returns per unit of risk. iShares iBoxx High is currently generating about 0.26 per unit of risk. If you would invest 1,922 in Principal Active High on November 2, 2024 and sell it today you would earn a total of 29.00 from holding Principal Active High or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Principal Active High vs. iShares iBoxx High
Performance |
| Timeline |
| Principal Active High |
| iShares iBoxx High |
Principal Active and IShares IBoxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Principal Active and IShares IBoxx
The main advantage of trading using opposite Principal Active and IShares IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Active 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.| Principal Active vs. SPDR Bloomberg Emerging | Principal Active vs. iShares Broad USD | Principal Active vs. SPDR Barclays Intermediate | Principal Active vs. Schwab Intermediate Term Treasury |
| IShares IBoxx vs. iShares iBoxx Investment | IShares IBoxx vs. SPDR Bloomberg High | IShares IBoxx vs. iShares TIPS Bond | IShares IBoxx vs. iShares 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |