Correlation Between Ishares Municipal and Dimensional 2035

Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Dimensional 2035 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 Dimensional 2035 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 Dimensional 2035 Target, you can compare the effects of market volatilities on Ishares Municipal and Dimensional 2035 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 Dimensional 2035. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Dimensional 2035.

Diversification Opportunities for Ishares Municipal and Dimensional 2035

0.67

Correlation Coefficient

Ishares Municipal  Dimensional 2035

Poor diversification

The 3 months correlation between Ishares and Dimensional is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Dimensional 2035 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2035 Target 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 Dimensional 2035. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2035 Target has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Dimensional 2035 go up and down completely randomly.

Pair Corralation between Ishares Municipal and Dimensional 2035

Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 0.26 times more return on investment than Dimensional 2035. However, Ishares Municipal Bond is 3.78 times less risky than Dimensional 2035. It trades about 0.02 of its potential returns per unit of risk. Dimensional 2035 Target is currently generating about -0.09 per unit of risk. If you would invest  1,106  in Ishares Municipal Bond on September 15, 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 Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ishares Municipal Bond  vs.  Dimensional 2035 Target

Ishares Municipal Bond

Risk-Adjusted Performance

0 of 100

Very 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.

Dimensional 2035 Target

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional 2035 Target has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dimensional 2035 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ishares Municipal and Dimensional 2035

The main advantage of trading using opposite Ishares Municipal and Dimensional 2035 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Dimensional 2035 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 Dimensional 2035 will offset losses from the drop in Dimensional 2035's long position.

The idea behind Ishares Municipal Bond and Dimensional 2035 Target 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.