Correlation Between IShares Short and BlackRock Intermediate

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

By analyzing existing cross correlation between iShares Short Maturity and BlackRock Intermediate Muni, you can compare the effects of market volatilities on IShares Short and BlackRock Intermediate 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 Short with a short position of BlackRock Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and BlackRock Intermediate.

Diversification Opportunities for IShares Short and BlackRock Intermediate

0.42

Correlation Coefficient

IShares Short  BlackRock Intermediate

Very weak diversification

The 3 months correlation between IShares and BlackRock is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Maturity and BlackRock Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Intermediate and IShares Short 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 Short Maturity are associated (or correlated) with BlackRock Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Intermediate has no effect on the direction of IShares Short i.e., IShares Short and BlackRock Intermediate go up and down completely randomly.

Pair Corralation between IShares Short and BlackRock Intermediate

Given the investment horizon of 90 days IShares Short is expected to generate 1.14 times less return on investment than BlackRock Intermediate. But when comparing it to its historical volatility, iShares Short Maturity is 3.61 times less risky than BlackRock Intermediate. It trades about 0.22 of its potential returns per unit of risk. BlackRock Intermediate Muni is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,175  in BlackRock Intermediate Muni on September 26, 2024 and sell it today you would earn a total of  180.00  from holding BlackRock Intermediate Muni or generate 8.28% return on investment over 90 days.

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

iShares Short Maturity  vs.  BlackRock Intermediate Muni

iShares Short Maturity

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Short Maturity are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Short is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

BlackRock Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Intermediate Muni has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, BlackRock Intermediate 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 Short and BlackRock Intermediate

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

The idea behind iShares Short Maturity and BlackRock Intermediate Muni 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.