Correlation Between IShares Treasury and IShares 25

Can any of the company-specific risk be diversified away by investing in both IShares Treasury and IShares 25 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 IShares 25 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 iShares 25 Year, you can compare the effects of market volatilities on IShares Treasury and IShares 25 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 IShares 25. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and IShares 25.

Diversification Opportunities for IShares Treasury and IShares 25

-0.68

Correlation Coefficient

IShares Treasury  IShares 25

Excellent diversification

The 3 months correlation between IShares and IShares is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Floating and iShares 25 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 25 Year 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 IShares 25. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 25 Year has no effect on the direction of IShares Treasury i.e., IShares Treasury and IShares 25 go up and down completely randomly.

Pair Corralation between IShares Treasury and IShares 25

Given the investment horizon of 90 days iShares Treasury Floating is expected to generate 0.01 times more return on investment than IShares 25. However, iShares Treasury Floating is 81.58 times less risky than IShares 25. It trades about 0.99 of its potential returns per unit of risk. iShares 25 Year is currently generating about -0.16 per unit of risk. If you would invest  4,982  in iShares Treasury Floating on September 30, 2024 and sell it today you would earn a total of  62.00  from holding iShares Treasury Floating or generate 1.24% return on investment over 90 days.

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

iShares Treasury Floating  vs.  iShares 25 Year

iShares Treasury Floating

Risk-Adjusted Performance

78 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Treasury Floating are ranked lower than 78 (%) 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.

iShares 25 Year

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares 25 Year 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with IShares Treasury and IShares 25

The main advantage of trading using opposite IShares Treasury and IShares 25 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury position performs unexpectedly, IShares 25 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 25 will offset losses from the drop in IShares 25's long position.

The idea behind iShares Treasury Floating and iShares 25 Year 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 Anywhere module to track or share privately all of your investments from the convenience of any device.