Correlation Between IShares Core and VanEck IBoxx
Can any of the company-specific risk be diversified away by investing in both IShares Core and VanEck IBoxx 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 Core and VanEck IBoxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Corp and VanEck iBoxx EUR, you can compare the effects of market volatilities on IShares Core and VanEck IBoxx 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 Core with a short position of VanEck IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and VanEck IBoxx.
Diversification Opportunities for IShares Core and VanEck IBoxx
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and VanEck is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Corp and VanEck iBoxx EUR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck iBoxx EUR and IShares Core 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 Core Corp are associated (or correlated) with VanEck IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck iBoxx EUR has no effect on the direction of IShares Core i.e., IShares Core and VanEck IBoxx go up and down completely randomly.
Pair Corralation between IShares Core and VanEck IBoxx
Assuming the 90 days trading horizon iShares Core Corp is expected to generate 0.32 times more return on investment than VanEck IBoxx. However, iShares Core Corp is 3.15 times less risky than VanEck IBoxx. It trades about 0.04 of its potential returns per unit of risk. VanEck iBoxx EUR is currently generating about -0.01 per unit of risk. If you would invest 10,939 in iShares Core Corp on December 4, 2024 and sell it today you would earn a total of 400.00 from holding iShares Core Corp or generate 3.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.0% |
Values | Daily Returns |
iShares Core Corp vs. VanEck iBoxx EUR
Performance |
Timeline |
iShares Core Corp |
VanEck iBoxx EUR |
IShares Core and VanEck IBoxx Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Core and VanEck IBoxx
The main advantage of trading using opposite IShares Core and VanEck IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, VanEck IBoxx 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 VanEck IBoxx will offset losses from the drop in VanEck IBoxx's long position.IShares Core vs. iShares Corp Bond | IShares Core vs. iShares Emerging Asia | IShares Core vs. iShares MSCI Global | IShares Core vs. iShares VII PLC |
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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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