Correlation Between Ishares Municipal and Multi-index 2050

Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Multi-index 2050 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 Multi-index 2050 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 Multi Index 2050 Lifetime, you can compare the effects of market volatilities on Ishares Municipal and Multi-index 2050 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 Multi-index 2050. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Multi-index 2050.

Diversification Opportunities for Ishares Municipal and Multi-index 2050

0.67

Correlation Coefficient

Ishares Municipal  Multi-index 2050

Poor diversification

The 3 months correlation between Ishares and Multi-index is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Multi Index 2050 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2050 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 Multi-index 2050. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2050 has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Multi-index 2050 go up and down completely randomly.

Pair Corralation between Ishares Municipal and Multi-index 2050

Assuming the 90 days horizon Ishares Municipal is expected to generate 4.7 times less return on investment than Multi-index 2050. But when comparing it to its historical volatility, Ishares Municipal Bond is 3.47 times less risky than Multi-index 2050. It trades about 0.07 of its potential returns per unit of risk. Multi Index 2050 Lifetime is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,499  in Multi Index 2050 Lifetime on October 25, 2024 and sell it today you would earn a total of  19.00  from holding Multi Index 2050 Lifetime or generate 1.27% 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.  Multi Index 2050 Lifetime

Ishares Municipal Bond

Risk-Adjusted Performance

0 of 100

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.

Multi Index 2050

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2050 Lifetime are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multi-index 2050 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 Multi-index 2050

The main advantage of trading using opposite Ishares Municipal and Multi-index 2050 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Multi-index 2050 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 Multi-index 2050 will offset losses from the drop in Multi-index 2050's long position.

The idea behind Ishares Municipal Bond and Multi Index 2050 Lifetime 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.