Correlation Between IShares BB and BlackRock Intermediate

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

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

Diversification Opportunities for IShares BB and BlackRock Intermediate

0.78

Correlation Coefficient

IShares BB  BlackRock Intermediate

Poor diversification

The 3 months correlation between IShares and BlackRock is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares BB Rated and BlackRock Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Intermediate and IShares BB 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 BB Rated are associated (or correlated) with BlackRock Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Intermediate has no effect on the direction of IShares BB i.e., IShares BB and BlackRock Intermediate go up and down completely randomly.

Pair Corralation between IShares BB and BlackRock Intermediate

Given the investment horizon of 90 days iShares BB Rated is expected to generate 1.02 times more return on investment than BlackRock Intermediate. However, IShares BB is 1.02 times more volatile than BlackRock Intermediate Muni. It trades about -0.11 of its potential returns per unit of risk. BlackRock Intermediate Muni is currently generating about -0.21 per unit of risk. If you would invest  4,652  in iShares BB Rated on October 11, 2024 and sell it today you would lose (38.00) from holding iShares BB Rated or give up 0.82% of portfolio value over 90 days.

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

iShares BB Rated  vs.  BlackRock Intermediate Muni

iShares BB Rated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares BB Rated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, IShares BB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BlackRock Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Intermediate Muni has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, BlackRock Intermediate is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares BB and BlackRock Intermediate

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

The idea behind iShares BB Rated and BlackRock Intermediate Muni 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.