Correlation Between IShares Intermediate and SPDR Bloomberg

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

By analyzing existing cross correlation between iShares Intermediate GovernmentCredit and SPDR Bloomberg Short, you can compare the effects of market volatilities on IShares Intermediate and SPDR Bloomberg 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 Intermediate with a short position of SPDR Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Intermediate and SPDR Bloomberg.

Diversification Opportunities for IShares Intermediate and SPDR Bloomberg

0.89

Correlation Coefficient

IShares Intermediate  SPDR Bloomberg

Very poor diversification

The 3 months correlation between IShares and SPDR is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares Intermediate Governmen and SPDR Bloomberg Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Short and IShares Intermediate 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 Intermediate GovernmentCredit are associated (or correlated) with SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Short has no effect on the direction of IShares Intermediate i.e., IShares Intermediate and SPDR Bloomberg go up and down completely randomly.

Pair Corralation between IShares Intermediate and SPDR Bloomberg

Considering the 90-day investment horizon iShares Intermediate GovernmentCredit is expected to generate 0.45 times more return on investment than SPDR Bloomberg. However, iShares Intermediate GovernmentCredit is 2.23 times less risky than SPDR Bloomberg. It trades about -0.13 of its potential returns per unit of risk. SPDR Bloomberg Short is currently generating about -0.13 per unit of risk. If you would invest  10,442  in iShares Intermediate GovernmentCredit on September 25, 2024 and sell it today you would lose (47.50) from holding iShares Intermediate GovernmentCredit or give up 0.45% of portfolio value over 90 days.

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

iShares Intermediate Governmen  vs.  SPDR Bloomberg Short

iShares Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Intermediate GovernmentCredit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IShares Intermediate is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

SPDR Bloomberg Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Bloomberg Short has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SPDR Bloomberg 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 Intermediate and SPDR Bloomberg

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

The idea behind iShares Intermediate GovernmentCredit and SPDR Bloomberg Short 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.