Correlation Between US Treasury and Bondbloxx ETF

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

By analyzing existing cross correlation between US Treasury 12 and Bondbloxx ETF Trust, you can compare the effects of market volatilities on US Treasury 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 US Treasury with a short position of Bondbloxx ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and Bondbloxx ETF.

Diversification Opportunities for US Treasury and Bondbloxx ETF

0.91

Correlation Coefficient

US Treasury  Bondbloxx ETF

Almost no diversification

The 3 months correlation between OBIL and Bondbloxx is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 12 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 US Treasury 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 US Treasury 12 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 US Treasury i.e., US Treasury and Bondbloxx ETF go up and down completely randomly.

Pair Corralation between US Treasury and Bondbloxx ETF

Given the investment horizon of 90 days US Treasury is expected to generate 2.82 times less return on investment than Bondbloxx ETF. But when comparing it to its historical volatility, US Treasury 12 is 14.02 times less risky than Bondbloxx ETF. It trades about 0.45 of its potential returns per unit of risk. Bondbloxx ETF Trust is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,468  in Bondbloxx ETF Trust on December 28, 2024 and sell it today you would earn a total of  122.00  from holding Bondbloxx ETF Trust or generate 2.73% return on investment over 90 days.

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

US Treasury 12  vs.  Bondbloxx ETF Trust

US Treasury 12

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in US Treasury 12 are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, US Treasury is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bondbloxx ETF Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bondbloxx ETF Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Bondbloxx ETF is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with US Treasury and Bondbloxx ETF

The main advantage of trading using opposite US Treasury and Bondbloxx ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury 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 US Treasury 12 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.