Correlation Between IShares IBoxx and Tesla
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and Tesla 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 Tesla 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 Tesla Inc, you can compare the effects of market volatilities on IShares IBoxx and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Tesla.
Diversification Opportunities for IShares IBoxx and Tesla
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Tesla is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Tesla go up and down completely randomly.
Pair Corralation between IShares IBoxx and Tesla
Considering the 90-day investment horizon iShares iBoxx High is expected to generate 0.09 times more return on investment than Tesla. However, iShares iBoxx High is 11.24 times less risky than Tesla. It trades about -0.1 of its potential returns per unit of risk. Tesla Inc is currently generating about -0.09 per unit of risk. If you would invest 7,709 in iShares iBoxx High on January 26, 2024 and sell it today you would lose (55.00) from holding iShares iBoxx High or give up 0.71% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
iShares iBoxx High vs. Tesla Inc
Performance |
Timeline |
iShares iBoxx High |
Tesla Inc |
IShares IBoxx and Tesla Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares IBoxx and Tesla
The main advantage of trading using opposite IShares IBoxx and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.IShares IBoxx vs. iShares iBoxx Investment | IShares IBoxx vs. iShares TIPS Bond | IShares IBoxx vs. iShares 20 Year | IShares IBoxx vs. iShares JP Morgan |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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