Correlation Between Invesco BulletShares and IShares IBonds

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

By analyzing existing cross correlation between Invesco BulletShares 2028 and iShares iBonds Dec, you can compare the effects of market volatilities on Invesco BulletShares and IShares IBonds 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 Invesco BulletShares with a short position of IShares IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco BulletShares and IShares IBonds.

Diversification Opportunities for Invesco BulletShares and IShares IBonds

0.94

Correlation Coefficient

Invesco BulletShares  IShares IBonds

Almost no diversification

The 3 months correlation between Invesco and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Invesco BulletShares 2028 and iShares iBonds Dec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBonds Dec and Invesco BulletShares 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 Invesco BulletShares 2028 are associated (or correlated) with IShares IBonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBonds Dec has no effect on the direction of Invesco BulletShares i.e., Invesco BulletShares and IShares IBonds go up and down completely randomly.

Pair Corralation between Invesco BulletShares and IShares IBonds

Given the investment horizon of 90 days Invesco BulletShares 2028 is expected to generate 0.76 times more return on investment than IShares IBonds. However, Invesco BulletShares 2028 is 1.31 times less risky than IShares IBonds. It trades about 0.12 of its potential returns per unit of risk. iShares iBonds Dec is currently generating about 0.05 per unit of risk. If you would invest  1,961  in Invesco BulletShares 2028 on September 22, 2024 and sell it today you would earn a total of  58.00  from holding Invesco BulletShares 2028 or generate 2.96% return on investment over 90 days.

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

Invesco BulletShares 2028  vs.  iShares iBonds Dec

Invesco BulletShares 2028

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco BulletShares 2028 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Invesco BulletShares is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares iBonds Dec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares iBonds Dec has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, IShares IBonds is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Invesco BulletShares and IShares IBonds

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

The idea behind Invesco BulletShares 2028 and iShares iBonds Dec 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..