Correlation Between IShares IBonds and IShares SMI

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

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

Diversification Opportunities for IShares IBonds and IShares SMI

-0.57

Correlation Coefficient

IShares IBonds  IShares SMI

Excellent diversification

The 3 months correlation between IShares and IShares is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBonds Dec and iShares SMI ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SMI ETF and IShares IBonds 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 iBonds Dec are associated (or correlated) with IShares SMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SMI ETF has no effect on the direction of IShares IBonds i.e., IShares IBonds and IShares SMI go up and down completely randomly.

Pair Corralation between IShares IBonds and IShares SMI

Assuming the 90 days trading horizon iShares iBonds Dec is expected to generate 0.41 times more return on investment than IShares SMI. However, iShares iBonds Dec is 2.47 times less risky than IShares SMI. It trades about 0.12 of its potential returns per unit of risk. iShares SMI ETF is currently generating about -0.07 per unit of risk. If you would invest  517.00  in iShares iBonds Dec on May 18, 2025 and sell it today you would earn a total of  9.00  from holding iShares iBonds Dec or generate 1.74% return on investment over 90 days.

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

iShares iBonds Dec  vs.  iShares SMI ETF

iShares iBonds Dec

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in iShares iBonds Dec are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares IBonds is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares SMI ETF

Risk-Adjusted Performance

Weakest

Over the last 90 days iShares SMI ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares SMI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares IBonds and IShares SMI

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

The idea behind iShares iBonds Dec and iShares SMI ETF 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.