Correlation Between IShares IBonds and MYCK

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

Diversification Opportunities for IShares IBonds and MYCK

0.72

Correlation Coefficient

IShares IBonds  MYCK

Poor diversification

The 3 months correlation between IShares and MYCK is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBonds Dec and MYCK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYCK 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 MYCK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYCK has no effect on the direction of IShares IBonds i.e., IShares IBonds and MYCK go up and down completely randomly.

Pair Corralation between IShares IBonds and MYCK

Given the investment horizon of 90 days iShares iBonds Dec is expected to generate 0.45 times more return on investment than MYCK. However, iShares iBonds Dec is 2.2 times less risky than MYCK. It trades about 0.2 of its potential returns per unit of risk. MYCK is currently generating about -0.13 per unit of risk. If you would invest  2,281  in iShares iBonds Dec on September 24, 2024 and sell it today you would earn a total of  109.00  from holding iShares iBonds Dec or generate 4.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	38.55%
Values	Daily Returns

iShares iBonds Dec  vs.  MYCK

iShares iBonds Dec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares iBonds Dec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, IShares IBonds is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

MYCK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MYCK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, MYCK is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares IBonds and MYCK

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

The idea behind iShares iBonds Dec and MYCK 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.