Correlation Between T Rex and IShares IBonds

Can any of the company-specific risk be diversified away by investing in both T Rex 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 T Rex and IShares IBonds 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 iBonds Dec, you can compare the effects of market volatilities on T Rex 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 T Rex with a short position of IShares IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and IShares IBonds.

Diversification Opportunities for T Rex and IShares IBonds

-0.74

Correlation Coefficient

T Rex  IShares IBonds

Pay attention - limited upside

The 3 months correlation between NVDX and IShares is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long 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 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 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 T Rex i.e., T Rex and IShares IBonds go up and down completely randomly.

Pair Corralation between T Rex and IShares IBonds

Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the IShares IBonds. In addition to that, T Rex is 51.87 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 0.06 per unit of volatility. If you would invest  2,504  in iShares iBonds Dec on December 28, 2024 and sell it today you would earn a total of  14.00  from holding iShares iBonds Dec or generate 0.56% return on investment over 90 days.

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

T Rex 2X Long  vs.  iShares iBonds Dec

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 iBonds Dec

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares iBonds Dec are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, IShares IBonds is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with T Rex and IShares IBonds

The main advantage of trading using opposite T Rex and IShares IBonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex 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 T Rex 2X Long 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.