Correlation Between SWP Growth and IShares IBonds

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

By analyzing existing cross correlation between SWP Growth Income and iShares iBonds Dec, you can compare the effects of market volatilities on SWP Growth 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 SWP Growth with a short position of IShares IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWP Growth and IShares IBonds.

Diversification Opportunities for SWP Growth and IShares IBonds

-0.31

Correlation Coefficient

SWP Growth  IShares IBonds

Very good diversification

The 3 months correlation between SWP and IShares is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SWP Growth Income 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 SWP Growth 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 SWP Growth Income 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 SWP Growth i.e., SWP Growth and IShares IBonds go up and down completely randomly.

Pair Corralation between SWP Growth and IShares IBonds

Considering the 90-day investment horizon SWP Growth Income is expected to generate 3.01 times more return on investment than IShares IBonds. However, SWP Growth is 3.01 times more volatile than iShares iBonds Dec. It trades about 0.03 of its potential returns per unit of risk. iShares iBonds Dec is currently generating about 0.07 per unit of risk. If you would invest  2,486  in SWP Growth Income on October 5, 2024 and sell it today you would earn a total of  30.00  from holding SWP Growth Income or generate 1.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.12%
Values	Daily Returns

SWP Growth Income  vs.  iShares iBonds Dec

SWP Growth Income

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SWP Growth Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, SWP Growth is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

iShares iBonds Dec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares iBonds Dec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IShares IBonds is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SWP Growth and IShares IBonds

The main advantage of trading using opposite SWP Growth and IShares IBonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWP Growth 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 SWP Growth Income 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.