Correlation Between IShares 0 and IShares Interest

Can any of the company-specific risk be diversified away by investing in both IShares 0 and IShares Interest 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 0 and IShares Interest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 0 3 Month and iShares Interest Rate, you can compare the effects of market volatilities on IShares 0 and IShares Interest 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 0 with a short position of IShares Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 0 and IShares Interest.

Diversification Opportunities for IShares 0 and IShares Interest

0.92

Correlation Coefficient

IShares 0  IShares Interest

Almost no diversification

The 3 months correlation between IShares and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares 0 3 Month and iShares Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Interest Rate and IShares 0 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 0 3 Month are associated (or correlated) with IShares Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Interest Rate has no effect on the direction of IShares 0 i.e., IShares 0 and IShares Interest go up and down completely randomly.

Pair Corralation between IShares 0 and IShares Interest

Given the investment horizon of 90 days IShares 0 is expected to generate 3.51 times less return on investment than IShares Interest. But when comparing it to its historical volatility, iShares 0 3 Month is 11.79 times less risky than IShares Interest. It trades about 1.15 of its potential returns per unit of risk. iShares Interest Rate is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  2,348  in iShares Interest Rate on September 12, 2024 and sell it today you would earn a total of  101.00  from holding iShares Interest Rate or generate 4.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

iShares 0 3 Month  vs.  iShares Interest Rate

iShares 0 3

Risk-Adjusted Performance

90 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 0 3 Month are ranked lower than 90 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares 0 is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares Interest Rate

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Interest Rate are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, IShares Interest is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares 0 and IShares Interest

The main advantage of trading using opposite IShares 0 and IShares Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 0 position performs unexpectedly, IShares Interest 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 Interest will offset losses from the drop in IShares Interest's long position.

The idea behind iShares 0 3 Month and iShares Interest Rate 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.