Correlation Between BondBloxx ETF and IShares Edge

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

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

Diversification Opportunities for BondBloxx ETF and IShares Edge

0.46

Correlation Coefficient

BondBloxx ETF  IShares Edge

Very weak diversification

The 3 months correlation between BondBloxx and IShares is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BondBloxx ETF Trust and iShares Edge Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Edge Investment and BondBloxx ETF 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 BondBloxx ETF Trust are associated (or correlated) with IShares Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Edge Investment has no effect on the direction of BondBloxx ETF i.e., BondBloxx ETF and IShares Edge go up and down completely randomly.

Pair Corralation between BondBloxx ETF and IShares Edge

Allowing for the 90-day total investment horizon BondBloxx ETF Trust is expected to generate 0.76 times more return on investment than IShares Edge. However, BondBloxx ETF Trust is 1.31 times less risky than IShares Edge. It trades about 0.08 of its potential returns per unit of risk. iShares Edge Investment is currently generating about -0.01 per unit of risk. If you would invest  3,941  in BondBloxx ETF Trust on November 28, 2024 and sell it today you would earn a total of  42.00  from holding BondBloxx ETF Trust or generate 1.07% return on investment over 90 days.

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

BondBloxx ETF Trust  vs.  iShares Edge Investment

BondBloxx ETF Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BondBloxx ETF Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, BondBloxx ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Edge Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Edge Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, IShares Edge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BondBloxx ETF and IShares Edge

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

The idea behind BondBloxx ETF Trust and iShares Edge 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.