Correlation Between IShares IBonds and Guru Favorite

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

Diversification Opportunities for IShares IBonds and Guru Favorite

-0.81

Correlation Coefficient

IShares IBonds  Guru Favorite

Pay attention - limited upside

The 3 months correlation between IShares and Guru is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBonds Dec and Guru Favorite Stocks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guru Favorite Stocks 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 Guru Favorite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guru Favorite Stocks has no effect on the direction of IShares IBonds i.e., IShares IBonds and Guru Favorite go up and down completely randomly.

Pair Corralation between IShares IBonds and Guru Favorite

Given the investment horizon of 90 days IShares IBonds is expected to generate 13.25 times less return on investment than Guru Favorite. But when comparing it to its historical volatility, iShares iBonds Dec is 2.18 times less risky than Guru Favorite. It trades about 0.02 of its potential returns per unit of risk. Guru Favorite Stocks is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,025  in Guru Favorite Stocks on September 5, 2024 and sell it today you would earn a total of  1,227  from holding Guru Favorite Stocks or generate 60.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

iShares iBonds Dec  vs.  Guru Favorite Stocks

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. Despite quite persistent basic indicators, IShares IBonds is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Guru Favorite Stocks

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guru Favorite Stocks are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Guru Favorite may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares IBonds and Guru Favorite

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

The idea behind iShares iBonds Dec and Guru Favorite Stocks 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.