Correlation Between Community Reinvestment and Ishares Aggregate

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

By analyzing existing cross correlation between Community Reinvestment Act and Ishares Aggregate Bond, you can compare the effects of market volatilities on Community Reinvestment and Ishares Aggregate 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 Community Reinvestment with a short position of Ishares Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Reinvestment and Ishares Aggregate.

Diversification Opportunities for Community Reinvestment and Ishares Aggregate

0.96

Correlation Coefficient

Community Reinvestment  Ishares Aggregate

Almost no diversification

The 3 months correlation between COMMUNITY and Ishares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Community Reinvestment Act and Ishares Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Aggregate Bond and Community Reinvestment 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 Community Reinvestment Act are associated (or correlated) with Ishares Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Aggregate Bond has no effect on the direction of Community Reinvestment i.e., Community Reinvestment and Ishares Aggregate go up and down completely randomly.

Pair Corralation between Community Reinvestment and Ishares Aggregate

Assuming the 90 days horizon Community Reinvestment Act is expected to under-perform the Ishares Aggregate. But the mutual fund apears to be less risky and, when comparing its historical volatility, Community Reinvestment Act is 1.38 times less risky than Ishares Aggregate. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Ishares Aggregate Bond is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  910.00  in Ishares Aggregate Bond on February 3, 2025 and sell it today you would lose (11.00) from holding Ishares Aggregate Bond or give up 1.21% of portfolio value over 90 days.

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

Community Reinvestment Act  vs.  Ishares Aggregate Bond

Community Reinvestment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Community Reinvestment Act are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Community Reinvestment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ishares Aggregate Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Aggregate Bond are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ishares Aggregate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Community Reinvestment and Ishares Aggregate

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

The idea behind Community Reinvestment Act and Ishares Aggregate Bond 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.