Correlation Between IShares Diversified and IShares Ultrashort

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

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

Diversification Opportunities for IShares Diversified and IShares Ultrashort

-0.35

Correlation Coefficient

IShares Diversified  IShares Ultrashort

Very good diversification

The 3 months correlation between IShares and IShares is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares Diversified Commodity and iShares Ultrashort Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Ultrashort Bond and IShares Diversified 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 Diversified Commodity are associated (or correlated) with IShares Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Ultrashort Bond has no effect on the direction of IShares Diversified i.e., IShares Diversified and IShares Ultrashort go up and down completely randomly.

Pair Corralation between IShares Diversified and IShares Ultrashort

Assuming the 90 days trading horizon iShares Diversified Commodity is expected to generate 0.67 times more return on investment than IShares Ultrashort. However, iShares Diversified Commodity is 1.5 times less risky than IShares Ultrashort. It trades about 0.0 of its potential returns per unit of risk. iShares Ultrashort Bond is currently generating about -0.01 per unit of risk. If you would invest  2,856  in iShares Diversified Commodity on May 5, 2025 and sell it today you would earn a total of  1.00  from holding iShares Diversified Commodity or generate 0.04% return on investment over 90 days.

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

iShares Diversified Commodity  vs.  iShares Ultrashort Bond

iShares Diversified

Risk-Adjusted Performance

Very Weak

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

iShares Ultrashort Bond

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Ultrashort Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Ultrashort 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 Diversified and IShares Ultrashort

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

The idea behind iShares Diversified Commodity and iShares Ultrashort 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.