diversifiable risk of combining Global Real and IShares GovernmentCredit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Real Estate and IShares GovernmentCredit Bond, you can compare the effects of market volatilities on Global Real and IShares GovernmentCredit 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 Global Real with a short position of IShares GovernmentCredit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Real and IShares GovernmentCredit.
Diversification Opportunities for Global Real and IShares GovernmentCredit
Pair Corralation between Global Real and IShares GovernmentCredit
Assuming the 90 days horizon Global Real Estate is expected to under-perform the IShares GovernmentCredit. In addition to that, Global Real is 2.63 times more volatile than IShares GovernmentCredit Bond. It trades about -0.02 of its total potential returns per unit of risk. IShares GovernmentCredit Bond is currently generating about -0.04 per unit of volatility. If you would invest 11,370 in IShares GovernmentCredit Bond on December 3, 2023 and sell it today you would lose (1,044) from holding IShares GovernmentCredit Bond or give up 9.18% of portfolio value over 90 days.
GLOBAL REAL ESTATE vs. IShares GovernmentCredit Bond
Global Real and IShares GovernmentCredit Volatility Contrast
Pair Trading with Global Real and IShares GovernmentCreditThe main advantage of trading using opposite Global Real and IShares GovernmentCredit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Real position performs unexpectedly, IShares GovernmentCredit 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 GovernmentCredit will offset losses from the drop in IShares GovernmentCredit's long position. The idea behind Global Real Estate and IShares GovernmentCredit 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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