Correlation Between IShares IBonds and VanEck Short

Can any of the company-specific risk be diversified away by investing in both IShares IBonds and VanEck Short 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 IBonds and VanEck Short into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares iBonds Dec and VanEck Short High, you can compare the effects of market volatilities on IShares IBonds and VanEck Short 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 IBonds with a short position of VanEck Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBonds and VanEck Short.

Diversification Opportunities for IShares IBonds and VanEck Short

0.57

Correlation Coefficient

IShares IBonds  VanEck Short

Very weak diversification

The 3 months correlation between IShares and VanEck is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBonds Dec and VanEck Short High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Short High and IShares IBonds 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 iBonds Dec are associated (or correlated) with VanEck Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Short High has no effect on the direction of IShares IBonds i.e., IShares IBonds and VanEck Short go up and down completely randomly.

Pair Corralation between IShares IBonds and VanEck Short

Given the investment horizon of 90 days iShares iBonds Dec is expected to under-perform the VanEck Short. But the etf apears to be less risky and, when comparing its historical volatility, iShares iBonds Dec is 2.12 times less risky than VanEck Short. The etf trades about -0.06 of its potential returns per unit of risk. The VanEck Short High is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,253  in VanEck Short High on September 27, 2024 and sell it today you would earn a total of  6.00  from holding VanEck Short High or generate 0.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

iShares iBonds Dec  vs.  VanEck Short High

iShares iBonds Dec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares iBonds Dec has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, IShares IBonds is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

VanEck Short High

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Short High are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, VanEck Short is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares IBonds and VanEck Short

The main advantage of trading using opposite IShares IBonds and VanEck Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBonds position performs unexpectedly, VanEck Short 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 VanEck Short will offset losses from the drop in VanEck Short's long position.

The idea behind iShares iBonds Dec and VanEck Short High pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.