Correlation Between BlackRock Intermediate and IShares Short

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

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

Diversification Opportunities for BlackRock Intermediate and IShares Short

0.42

Correlation Coefficient

BlackRock Intermediate  IShares Short

Very weak diversification

The 3 months correlation between BlackRock and IShares is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Intermediate Muni and iShares Short Maturity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Short Maturity and BlackRock Intermediate 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 BlackRock Intermediate Muni are associated (or correlated) with IShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Short Maturity has no effect on the direction of BlackRock Intermediate i.e., BlackRock Intermediate and IShares Short go up and down completely randomly.

Pair Corralation between BlackRock Intermediate and IShares Short

Given the investment horizon of 90 days BlackRock Intermediate Muni is expected to under-perform the IShares Short. In addition to that, BlackRock Intermediate is 4.25 times more volatile than iShares Short Maturity. It trades about -0.06 of its total potential returns per unit of risk. iShares Short Maturity is currently generating about 0.08 per unit of volatility. If you would invest  4,977  in iShares Short Maturity on September 27, 2024 and sell it today you would earn a total of  18.00  from holding iShares Short Maturity or generate 0.36% return on investment over 90 days.

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

BlackRock Intermediate Muni  vs.  iShares Short Maturity

BlackRock Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Intermediate Muni has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, BlackRock Intermediate is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

iShares Short Maturity

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Short Maturity are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Short is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BlackRock Intermediate and IShares Short

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

The idea behind BlackRock Intermediate Muni and iShares Short Maturity 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.