Correlation Between IShares IBoxx and Invesco

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

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

Diversification Opportunities for IShares IBoxx and Invesco

0.69

Correlation Coefficient

IShares IBoxx  Invesco

Poor diversification

The 3 months correlation between IShares and Invesco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx Investment and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco and IShares IBoxx 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 iBoxx Investment are associated (or correlated) with Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Invesco go up and down completely randomly.

Pair Corralation between IShares IBoxx and Invesco

If you would invest  2,897  in Invesco on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Invesco or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

iShares iBoxx Investment  vs.  Invesco

iShares iBoxx Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares iBoxx Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IShares IBoxx is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Invesco is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares IBoxx and Invesco

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

The idea behind iShares iBoxx Investment and Invesco 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.