Correlation Between IShares IBonds and Invesco BulletShares

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

By analyzing existing cross correlation between iShares iBonds Dec and Invesco BulletShares 2030, you can compare the effects of market volatilities on IShares IBonds and Invesco BulletShares 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 IBonds with a short position of Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBonds and Invesco BulletShares.

Diversification Opportunities for IShares IBonds and Invesco BulletShares

-0.62

Correlation Coefficient

IShares IBonds  Invesco BulletShares

Excellent diversification

The 3 months correlation between IShares and Invesco is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBonds Dec and Invesco BulletShares 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2030 and IShares IBonds 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 iBonds Dec are associated (or correlated) with Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2030 has no effect on the direction of IShares IBonds i.e., IShares IBonds and Invesco BulletShares go up and down completely randomly.

Pair Corralation between IShares IBonds and Invesco BulletShares

Given the investment horizon of 90 days iShares iBonds Dec is expected to generate 0.09 times more return on investment than Invesco BulletShares. However, iShares iBonds Dec is 11.69 times less risky than Invesco BulletShares. It trades about 0.55 of its potential returns per unit of risk. Invesco BulletShares 2030 is currently generating about -0.01 per unit of risk. If you would invest  2,507  in iShares iBonds Dec on September 21, 2024 and sell it today you would earn a total of  8.00  from holding iShares iBonds Dec or generate 0.32% return on investment over 90 days.

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

iShares iBonds Dec  vs.  Invesco BulletShares 2030

iShares iBonds Dec

Risk-Adjusted Performance

50 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in iShares iBonds Dec are ranked lower than 50 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, IShares IBonds is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Invesco BulletShares 2030

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco BulletShares 2030 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Invesco BulletShares 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 IBonds and Invesco BulletShares

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

The idea behind iShares iBonds Dec and Invesco BulletShares 2030 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.