Correlation Between IShares Floating and Purpose Total

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

By analyzing existing cross correlation between iShares Floating Rate and Purpose Total Return, you can compare the effects of market volatilities on IShares Floating and Purpose Total 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 Floating with a short position of Purpose Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Floating and Purpose Total.

Diversification Opportunities for IShares Floating and Purpose Total

0.91

Correlation Coefficient

IShares Floating  Purpose Total

Almost no diversification

The 3 months correlation between IShares and Purpose is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Floating Rate and Purpose Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Total Return and IShares Floating 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 Floating Rate are associated (or correlated) with Purpose Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Total Return has no effect on the direction of IShares Floating i.e., IShares Floating and Purpose Total go up and down completely randomly.

Pair Corralation between IShares Floating and Purpose Total

Assuming the 90 days trading horizon IShares Floating is expected to generate 3.76 times less return on investment than Purpose Total. But when comparing it to its historical volatility, iShares Floating Rate is 5.17 times less risky than Purpose Total. It trades about 0.29 of its potential returns per unit of risk. Purpose Total Return is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,613  in Purpose Total Return on April 20, 2025 and sell it today you would earn a total of  53.00  from holding Purpose Total Return or generate 3.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

iShares Floating Rate  vs.  Purpose Total Return

iShares Floating Rate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Floating Rate are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Floating is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Purpose Total Return

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Total Return are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Purpose Total is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Floating and Purpose Total

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

The idea behind iShares Floating Rate and Purpose Total Return 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.