Correlation Between IShares 1 and Fidelity Corporate

Can any of the company-specific risk be diversified away by investing in both IShares 1 and Fidelity Corporate 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 1 and Fidelity Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 1 3 Year and Fidelity Corporate Bond, you can compare the effects of market volatilities on IShares 1 and Fidelity Corporate 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 1 with a short position of Fidelity Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and Fidelity Corporate.

Diversification Opportunities for IShares 1 and Fidelity Corporate

0.89

Correlation Coefficient

IShares 1  Fidelity Corporate

Very poor diversification

The 3 months correlation between IShares and Fidelity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 3 Year and Fidelity Corporate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Corporate Bond and IShares 1 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 1 3 Year are associated (or correlated) with Fidelity Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Corporate Bond has no effect on the direction of IShares 1 i.e., IShares 1 and Fidelity Corporate go up and down completely randomly.

Pair Corralation between IShares 1 and Fidelity Corporate

Considering the 90-day investment horizon iShares 1 3 Year is expected to under-perform the Fidelity Corporate. But the etf apears to be less risky and, when comparing its historical volatility, iShares 1 3 Year is 3.67 times less risky than Fidelity Corporate. The etf trades about -0.03 of its potential returns per unit of risk. The Fidelity Corporate Bond is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  4,757  in Fidelity Corporate Bond on September 4, 2024 and sell it today you would lose (2.00) from holding Fidelity Corporate Bond or give up 0.04% of portfolio value over 90 days.

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

iShares 1 3 Year  vs.  Fidelity Corporate Bond

iShares 1 3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares 1 3 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, IShares 1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Corporate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Corporate Bond has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fidelity Corporate is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares 1 and Fidelity Corporate

The main advantage of trading using opposite IShares 1 and Fidelity Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 position performs unexpectedly, Fidelity Corporate 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 Fidelity Corporate will offset losses from the drop in Fidelity Corporate's long position.

The idea behind iShares 1 3 Year and Fidelity Corporate Bond 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.