Correlation Between IShares IBoxx and Rems Real

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

By analyzing existing cross correlation between iShares iBoxx High and Rems Real Estate, you can compare the effects of market volatilities on IShares IBoxx and Rems Real 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 IBoxx with a short position of Rems Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Rems Real.

Diversification Opportunities for IShares IBoxx and Rems Real

0.18

Correlation Coefficient

IShares IBoxx  Rems Real

Average diversification

The 3 months correlation between IShares and Rems is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and Rems Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rems Real Estate and IShares IBoxx 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 iBoxx High are associated (or correlated) with Rems Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rems Real Estate has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Rems Real go up and down completely randomly.

Pair Corralation between IShares IBoxx and Rems Real

Considering the 90-day investment horizon iShares iBoxx High is expected to generate 0.48 times more return on investment than Rems Real. However, iShares iBoxx High is 2.07 times less risky than Rems Real. It trades about 0.05 of its potential returns per unit of risk. Rems Real Estate is currently generating about 0.0 per unit of risk. If you would invest  6,673  in iShares iBoxx High on January 25, 2024 and sell it today you would earn a total of  981.00  from holding iShares iBoxx High or generate 14.7% return on investment over 90 days.

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

iShares iBoxx High  vs.  Rems Real Estate

iShares iBoxx High

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares iBoxx High are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IShares IBoxx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Rems Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rems Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rems Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares IBoxx and Rems Real

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

The idea behind iShares iBoxx High and Rems Real Estate 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.