Correlation Between T Rex and IShares Intermediate

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

By analyzing existing cross correlation between T Rex 2X Long and iShares Intermediate GovernmentCredit, you can compare the effects of market volatilities on T Rex and IShares 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 T Rex with a short position of IShares Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and IShares Intermediate.

Diversification Opportunities for T Rex and IShares Intermediate

-0.85

Correlation Coefficient

T Rex  IShares Intermediate

Pay attention - limited upside

The 3 months correlation between NVDX and IShares is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and iShares Intermediate Governmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Intermediate and T Rex 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 T Rex 2X Long are associated (or correlated) with IShares Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Intermediate has no effect on the direction of T Rex i.e., T Rex and IShares Intermediate go up and down completely randomly.

Pair Corralation between T Rex and IShares Intermediate

Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the IShares Intermediate. In addition to that, T Rex is 45.51 times more volatile than iShares Intermediate GovernmentCredit. It trades about -0.07 of its total potential returns per unit of risk. iShares Intermediate GovernmentCredit is currently generating about 0.16 per unit of volatility. If you would invest  10,367  in iShares Intermediate GovernmentCredit on December 28, 2024 and sell it today you would earn a total of  186.00  from holding iShares Intermediate GovernmentCredit or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

T Rex 2X Long  vs.  iShares Intermediate Governmen

T Rex 2X

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rex 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

iShares Intermediate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Intermediate GovernmentCredit are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IShares Intermediate is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with T Rex and IShares Intermediate

The main advantage of trading using opposite T Rex and IShares Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, IShares 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 IShares Intermediate will offset losses from the drop in IShares Intermediate's long position.

The idea behind T Rex 2X Long and iShares Intermediate GovernmentCredit 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.