Correlation Between IShares Intermediate and VanEck Green

Can any of the company-specific risk be diversified away by investing in both IShares Intermediate and VanEck Green 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 VanEck Green 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 VanEck Green Bond, you can compare the effects of market volatilities on IShares Intermediate and VanEck Green 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 VanEck Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Intermediate and VanEck Green.

Diversification Opportunities for IShares Intermediate and VanEck Green

0.97

Correlation Coefficient

IShares Intermediate  VanEck Green

Almost no diversification

The 3 months correlation between IShares and VanEck is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Intermediate Governmen and VanEck Green Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Green Bond 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 VanEck Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Green Bond has no effect on the direction of IShares Intermediate i.e., IShares Intermediate and VanEck Green go up and down completely randomly.

Pair Corralation between IShares Intermediate and VanEck Green

Considering the 90-day investment horizon IShares Intermediate is expected to generate 1.29 times less return on investment than VanEck Green. But when comparing it to its historical volatility, iShares Intermediate GovernmentCredit is 1.17 times less risky than VanEck Green. It trades about 0.05 of its potential returns per unit of risk. VanEck Green Bond is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,186  in VanEck Green Bond on September 29, 2024 and sell it today you would earn a total of  185.00  from holding VanEck Green Bond or generate 8.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

iShares Intermediate Governmen  vs.  VanEck Green Bond

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.

VanEck Green Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Green Bond has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, VanEck Green 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 VanEck Green

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

The idea behind iShares Intermediate GovernmentCredit and VanEck Green Bond 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.