Correlation Between IShares GovernmentCredit and Dws Government

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

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

Diversification Opportunities for IShares GovernmentCredit and Dws Government

0.71

Correlation Coefficient

IShares GovernmentCredit  Dws Government

Poor diversification

The 3 months correlation between IShares and Dws is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares GovernmentCredit Bond and Dws Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dws Government Money and IShares GovernmentCredit 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 GovernmentCredit Bond are associated (or correlated) with Dws Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dws Government Money has no effect on the direction of IShares GovernmentCredit i.e., IShares GovernmentCredit and Dws Government go up and down completely randomly.

Pair Corralation between IShares GovernmentCredit and Dws Government

Considering the 90-day investment horizon iShares GovernmentCredit Bond is expected to generate 0.02 times more return on investment than Dws Government. However, iShares GovernmentCredit Bond is 52.51 times less risky than Dws Government. It trades about -0.27 of its potential returns per unit of risk. Dws Government Money is currently generating about -0.23 per unit of risk. If you would invest  10,302  in iShares GovernmentCredit Bond on January 26, 2024 and sell it today you would lose (204.00) from holding iShares GovernmentCredit Bond or give up 1.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.48%
Values	Daily Returns

iShares GovernmentCredit Bond  vs.  Dws Government Money

IShares GovernmentCredit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares GovernmentCredit Bond has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, IShares GovernmentCredit is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dws Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dws Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with IShares GovernmentCredit and Dws Government

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

The idea behind iShares GovernmentCredit Bond and Dws Government Money 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.