Correlation Between Ishares Sp and Inflation-adjusted

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

By analyzing existing cross correlation between Ishares Sp 500 and Inflation Adjusted Bond Fund, you can compare the effects of market volatilities on Ishares Sp and Inflation-adjusted 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 Sp with a short position of Inflation-adjusted. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Sp and Inflation-adjusted.

Diversification Opportunities for Ishares Sp and Inflation-adjusted

-0.16

Correlation Coefficient

Ishares Sp  Inflation-adjusted

Good diversification

The 3 months correlation between Ishares and Inflation-adjusted is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Sp 500 and Inflation Adjusted Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Adjusted Bond and Ishares Sp 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 Sp 500 are associated (or correlated) with Inflation-adjusted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Adjusted Bond has no effect on the direction of Ishares Sp i.e., Ishares Sp and Inflation-adjusted go up and down completely randomly.

Pair Corralation between Ishares Sp and Inflation-adjusted

Assuming the 90 days horizon Ishares Sp 500 is expected to under-perform the Inflation-adjusted. In addition to that, Ishares Sp is 4.32 times more volatile than Inflation Adjusted Bond Fund. It trades about -0.09 of its total potential returns per unit of risk. Inflation Adjusted Bond Fund is currently generating about -0.35 per unit of volatility. If you would invest  1,049  in Inflation Adjusted Bond Fund on October 11, 2024 and sell it today you would lose (17.00) from holding Inflation Adjusted Bond Fund or give up 1.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ishares Sp 500  vs.  Inflation Adjusted Bond Fund

Ishares Sp 500

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Sp 500 are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Ishares Sp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Inflation Adjusted Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inflation Adjusted Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Inflation-adjusted 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 Sp and Inflation-adjusted

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

The idea behind Ishares Sp 500 and Inflation Adjusted Bond Fund 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.