Correlation Between IShares Convertible and Five Star
Can any of the company-specific risk be diversified away by investing in both IShares Convertible and Five Star 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 Convertible and Five Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Convertible Bond and Five Star Bancorp, you can compare the effects of market volatilities on IShares Convertible and Five Star 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 Convertible with a short position of Five Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Convertible and Five Star.
Diversification Opportunities for IShares Convertible and Five Star
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IShares and Five is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding iShares Convertible Bond and Five Star Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Star Bancorp and IShares Convertible 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 Convertible Bond are associated (or correlated) with Five Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Star Bancorp has no effect on the direction of IShares Convertible i.e., IShares Convertible and Five Star go up and down completely randomly.
Pair Corralation between IShares Convertible and Five Star
Given the investment horizon of 90 days IShares Convertible is expected to generate 1.3 times less return on investment than Five Star. But when comparing it to its historical volatility, iShares Convertible Bond is 3.97 times less risky than Five Star. It trades about 0.08 of its potential returns per unit of risk. Five Star Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,027 in Five Star Bancorp on January 26, 2024 and sell it today you would earn a total of 168.00 from holding Five Star Bancorp or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Convertible Bond vs. Five Star Bancorp
Performance |
| Timeline |
| iShares Convertible Bond |
| Five Star Bancorp |
IShares Convertible and Five Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Convertible and Five Star
The main advantage of trading using opposite IShares Convertible and Five Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Convertible position performs unexpectedly, Five Star 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 Five Star will offset losses from the drop in Five Star's long position.| IShares Convertible vs. Invesco Senior Loan | IShares Convertible vs. SPDR Bloomberg Short | IShares Convertible vs. Invesco Emerging Markets | IShares Convertible vs. SPDR Blackstone Senior |
| Five Star vs. Community West Bancshares | Five Star vs. HMN Financial | Five Star vs. First Northwest Bancorp | Five Star vs. Cullman Bancorp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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