Correlation Between IShares Trust and Invesco BulletShares

Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 Trust 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 Trust and Invesco BulletShares 2029, you can compare the effects of market volatilities on IShares Trust 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 Trust with a short position of Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Invesco BulletShares.

Diversification Opportunities for IShares Trust and Invesco BulletShares

0.8

Correlation Coefficient

IShares Trust  Invesco BulletShares

Very poor diversification

The 3 months correlation between IShares and Invesco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Invesco BulletShares 2029 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2029 and IShares Trust 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 Trust 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 2029 has no effect on the direction of IShares Trust i.e., IShares Trust and Invesco BulletShares go up and down completely randomly.

Pair Corralation between IShares Trust and Invesco BulletShares

Given the investment horizon of 90 days iShares Trust is expected to generate 0.8 times more return on investment than Invesco BulletShares. However, iShares Trust is 1.24 times less risky than Invesco BulletShares. It trades about 0.04 of its potential returns per unit of risk. Invesco BulletShares 2029 is currently generating about 0.02 per unit of risk. If you would invest  2,515  in iShares Trust on December 26, 2024 and sell it today you would earn a total of  10.00  from holding iShares Trust or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

iShares Trust   vs.  Invesco BulletShares 2029

iShares Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, IShares Trust is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Invesco BulletShares 2029

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco BulletShares 2029 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary 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 Trust and Invesco BulletShares

The main advantage of trading using opposite IShares Trust and Invesco BulletShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 Trust and Invesco BulletShares 2029 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.