Correlation Between IShares Treasury and SPDR Bloomberg

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

By analyzing existing cross correlation between iShares Treasury Floating and SPDR Bloomberg Investment, you can compare the effects of market volatilities on IShares Treasury and SPDR Bloomberg 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 Treasury with a short position of SPDR Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and SPDR Bloomberg.

Diversification Opportunities for IShares Treasury and SPDR Bloomberg

1.0

Correlation Coefficient

IShares Treasury  SPDR Bloomberg

No risk reduction

The 3 months correlation between IShares and SPDR is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Floating and SPDR Bloomberg Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Investment and IShares 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 iShares Treasury Floating are associated (or correlated) with SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Investment has no effect on the direction of IShares Treasury i.e., IShares Treasury and SPDR Bloomberg go up and down completely randomly.

Pair Corralation between IShares Treasury and SPDR Bloomberg

Given the investment horizon of 90 days IShares Treasury is expected to generate 1.17 times less return on investment than SPDR Bloomberg. But when comparing it to its historical volatility, iShares Treasury Floating is 2.55 times less risky than SPDR Bloomberg. It trades about 0.96 of its potential returns per unit of risk. SPDR Bloomberg Investment is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  2,916  in SPDR Bloomberg Investment on December 2, 2024 and sell it today you would earn a total of  170.00  from holding SPDR Bloomberg Investment or generate 5.83% return on investment over 90 days.

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

iShares Treasury Floating  vs.  SPDR Bloomberg Investment

iShares Treasury Floating

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Treasury Floating are ranked lower than 65 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, IShares Treasury is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

SPDR Bloomberg Investment

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg Investment are ranked lower than 54 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, SPDR Bloomberg is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Treasury and SPDR Bloomberg

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

The idea behind iShares Treasury Floating and SPDR Bloomberg Investment 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.