Correlation Between Short-intermediate and Ishares Us

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

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

Diversification Opportunities for Short-intermediate and Ishares Us

0.87

Correlation Coefficient

Short-intermediate  Ishares Us

Very poor diversification

The 3 months correlation between Short-intermediate and Ishares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Short Intermediate Bond Fund 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 Short-intermediate 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 Short Intermediate Bond Fund are associated (or correlated) with Ishares Us. 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 Short-intermediate i.e., Short-intermediate and Ishares Us go up and down completely randomly.

Pair Corralation between Short-intermediate and Ishares Us

Assuming the 90 days horizon Short Intermediate Bond Fund is expected to generate 0.41 times more return on investment than Ishares Us. However, Short Intermediate Bond Fund is 2.42 times less risky than Ishares Us. It trades about 0.04 of its potential returns per unit of risk. Ishares Aggregate Bond is currently generating about -0.03 per unit of risk. If you would invest  905.00  in Short Intermediate Bond Fund on February 6, 2025 and sell it today you would earn a total of  1.00  from holding Short Intermediate Bond Fund or generate 0.11% return on investment over 90 days.

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

Short Intermediate Bond Fund  vs.  Ishares Aggregate Bond

Short Intermediate Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Short Intermediate Bond Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short-intermediate 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 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ishares Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Short-intermediate and Ishares Us

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

The idea behind Short Intermediate Bond Fund 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.