Correlation Between IShares 3 and Bondbloxx ETF

Can any of the company-specific risk be diversified away by investing in both IShares 3 and Bondbloxx ETF 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 3 and Bondbloxx ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 3 7 Year and Bondbloxx ETF Trust, you can compare the effects of market volatilities on IShares 3 and Bondbloxx ETF 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 3 with a short position of Bondbloxx ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 3 and Bondbloxx ETF.

Diversification Opportunities for IShares 3 and Bondbloxx ETF

0.98

Correlation Coefficient

IShares 3  Bondbloxx ETF

Almost no diversification

The 3 months correlation between IShares and Bondbloxx is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares 3 7 Year and Bondbloxx ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bondbloxx ETF Trust and IShares 3 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 3 7 Year are associated (or correlated) with Bondbloxx ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bondbloxx ETF Trust has no effect on the direction of IShares 3 i.e., IShares 3 and Bondbloxx ETF go up and down completely randomly.

Pair Corralation between IShares 3 and Bondbloxx ETF

Considering the 90-day investment horizon iShares 3 7 Year is expected to generate 0.43 times more return on investment than Bondbloxx ETF. However, iShares 3 7 Year is 2.32 times less risky than Bondbloxx ETF. It trades about -0.07 of its potential returns per unit of risk. Bondbloxx ETF Trust is currently generating about -0.09 per unit of risk. If you would invest  11,618  in iShares 3 7 Year on September 23, 2024 and sell it today you would lose (84.00) from holding iShares 3 7 Year or give up 0.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

iShares 3 7 Year  vs.  Bondbloxx ETF Trust

iShares 3 7

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares 3 7 Year has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, IShares 3 is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Bondbloxx ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bondbloxx ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Bondbloxx ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares 3 and Bondbloxx ETF

The main advantage of trading using opposite IShares 3 and Bondbloxx ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 3 position performs unexpectedly, Bondbloxx ETF 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 Bondbloxx ETF will offset losses from the drop in Bondbloxx ETF's long position.

The idea behind iShares 3 7 Year and Bondbloxx ETF Trust 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.