Correlation Between IREIT MarketVector and IShares IBonds

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Can any of the company-specific risk be diversified away by investing in both IREIT MarketVector and IShares IBonds 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 IREIT MarketVector and IShares IBonds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iREIT MarketVector and iShares iBonds Dec, you can compare the effects of market volatilities on IREIT MarketVector and IShares IBonds 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 IREIT MarketVector with a short position of IShares IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of IREIT MarketVector and IShares IBonds.

Diversification Opportunities for IREIT MarketVector and IShares IBonds

IREITISharesDiversified AwayIREITISharesDiversified Away100%
-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between IREIT and IShares is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding iREIT MarketVector and iShares iBonds Dec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBonds Dec and IREIT MarketVector 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 iREIT MarketVector are associated (or correlated) with IShares IBonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBonds Dec has no effect on the direction of IREIT MarketVector i.e., IREIT MarketVector and IShares IBonds go up and down completely randomly.

Pair Corralation between IREIT MarketVector and IShares IBonds

Given the investment horizon of 90 days iREIT MarketVector is expected to under-perform the IShares IBonds. In addition to that, IREIT MarketVector is 16.19 times more volatile than iShares iBonds Dec. It trades about -0.08 of its total potential returns per unit of risk. iShares iBonds Dec is currently generating about 0.26 per unit of volatility. If you would invest  2,405  in iShares iBonds Dec on November 20, 2024 and sell it today you would earn a total of  7.50  from holding iShares iBonds Dec or generate 0.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

iREIT MarketVector  vs.  iShares iBonds Dec

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -12-10-8-6-4-202
JavaScript chart by amCharts 3.21.15IRET IBDR
       Timeline  
iREIT MarketVector 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days iREIT MarketVector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb19.52020.52121.522
iShares iBonds Dec 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in iShares iBonds Dec are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, IShares IBonds is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb23.8523.923.952424.0524.124.1524.224.25

IREIT MarketVector and IShares IBonds Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.68-1.28-0.88-0.48-0.09040.180.580.981.381.78 20406080
JavaScript chart by amCharts 3.21.15IRET IBDR
       Returns  

Pair Trading with IREIT MarketVector and IShares IBonds

The main advantage of trading using opposite IREIT MarketVector and IShares IBonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IREIT MarketVector position performs unexpectedly, IShares IBonds 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 IShares IBonds will offset losses from the drop in IShares IBonds' long position.
The idea behind iREIT MarketVector and iShares iBonds Dec 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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