Correlation Between Ishares Municipal and Bear Profund

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Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Bear Profund 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 Municipal and Bear Profund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Municipal Bond and Bear Profund Bear, you can compare the effects of market volatilities on Ishares Municipal and Bear Profund 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 Municipal with a short position of Bear Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Bear Profund.

Diversification Opportunities for Ishares Municipal and Bear Profund

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Ishares and Bear is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Bear Profund Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bear Profund Bear and Ishares Municipal 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 Municipal Bond are associated (or correlated) with Bear Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bear Profund Bear has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Bear Profund go up and down completely randomly.

Pair Corralation between Ishares Municipal and Bear Profund

Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 0.32 times more return on investment than Bear Profund. However, Ishares Municipal Bond is 3.13 times less risky than Bear Profund. It trades about 0.01 of its potential returns per unit of risk. Bear Profund Bear is currently generating about -0.07 per unit of risk. If you would invest  1,095  in Ishares Municipal Bond on October 25, 2024 and sell it today you would earn a total of  1.00  from holding Ishares Municipal Bond or generate 0.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Ishares Municipal Bond  vs.  Bear Profund Bear

 Performance 
       Timeline  
Ishares Municipal Bond 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Ishares Municipal Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ishares Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Bear Profund Bear 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bear Profund Bear has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Bear Profund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ishares Municipal and Bear Profund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ishares Municipal and Bear Profund

The main advantage of trading using opposite Ishares Municipal and Bear Profund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Bear Profund 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 Bear Profund will offset losses from the drop in Bear Profund's long position.
The idea behind Ishares Municipal Bond and Bear Profund Bear 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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