Correlation Between IShares IBoxx and Northern Lights
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and Northern Lights 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 IBoxx and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares iBoxx High and Northern Lights, you can compare the effects of market volatilities on IShares IBoxx and Northern Lights 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 IBoxx with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Northern Lights.
Diversification Opportunities for IShares IBoxx and Northern Lights
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Northern is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and IShares IBoxx 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 iBoxx High are associated (or correlated) with Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Northern Lights go up and down completely randomly.
Pair Corralation between IShares IBoxx and Northern Lights
Considering the 90-day investment horizon iShares iBoxx High is expected to generate 0.84 times more return on investment than Northern Lights. However, iShares iBoxx High is 1.19 times less risky than Northern Lights. It trades about 0.17 of its potential returns per unit of risk. Northern Lights is currently generating about 0.08 per unit of risk. If you would invest 7,313 in iShares iBoxx High on September 24, 2024 and sell it today you would earn a total of 545.00 from holding iShares iBoxx High or generate 7.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
iShares iBoxx High vs. Northern Lights
Performance |
Timeline |
iShares iBoxx High |
Northern Lights |
IShares IBoxx and Northern Lights Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares IBoxx and Northern Lights
The main advantage of trading using opposite IShares IBoxx and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' long position.IShares IBoxx vs. iShares iBoxx Investment | IShares IBoxx vs. SPDR Bloomberg High | IShares IBoxx vs. iShares TIPS Bond | IShares IBoxx vs. iShares 20 Year |
Northern Lights vs. iShares iBoxx High | Northern Lights vs. iShares Broad USD | Northern Lights vs. iShares 0 5 Year | Northern Lights vs. Xtrackers USD High |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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