LQD vs SHY: Correlation
iShares iBoxx Investment Grade Corporate Bond ETF (LQD) and iShares 1-3 Year Treasury Bond ETF (SHY) show a strong relationship: their 3-year correlation of weekly returns is 0.75.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are LQD and SHY?
On 3 years of weekly data the LQD/SHY correlation comes out at 0.75, strong. The relationship has been stable: the 1-year correlation (0.74) sits close to the 3-year figure. The 5-year figure is 0.67, and annualized covariance runs at 8.5 %².
By 3-year correlation, SHY places #7 of the 33 assets tracked against LQD. Twelve-month performance is nearly a tie, at +1.5% for LQD and +2.5% for SHY. On a rolling one-year basis the correlation drifted between 0.57 and 0.84, a moderate band. Note the risk asymmetry: LQD runs 4.6 times the annualized volatility of the other leg, so equal-weighting the two is not an equal-risk position.
How is this computed?
Pearson correlation on weekly returns: ρ(A,B) = cov(rA, rB) / (σA · σB), over windows of 52, 156 and 260 weeks. Covariance is annualized (×52) and expressed in %². Full definitions on the methodology page.
LQD vs SHY: side by side
| LQD (iShares iBoxx Investment Grade Corporate Bond ETF) | SHY (iShares 1-3 Year Treasury Bond ETF) | |
|---|---|---|
| 1-year return | +1.5% | +2.5% |
| 5-year return | -4.1% | +9.6% |
| Volatility (ann.) | 7.3% | 1.6% |
| Beta vs S&P 500 | 0.15 | 0.00 |
| Max drawdown (3Y) | -6.7% | -1.0% |
| Dividend yield | 4.66% | 3.65% |
| Expense ratio | 0.14% | 0.15% |
| Assets under management | $33.0B | $25.1B |
| Sector / category | ETF · Bonds | ETF · Bonds |
On the fund side, LQD sits in the Corporate Bond category at iShares, with $33.0B under management, a 0.14% expense ratio, a 4.66% trailing dividend yield. SHY, iShares's Short Government fund, carries $25.1B under management, a 0.15% expense ratio, a 3.65% trailing dividend yield.
Year-by-year returns
| Year | LQD | SHY |
|---|---|---|
| 2022 | -17.9% | -3.9% |
| 2023 | +9.4% | +4.2% |
| 2024 | +0.9% | +3.9% |
| 2025 | +7.9% | +5.0% |
| 2026 | -0.5% | +1.1% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are LQD and SHY good diversifiers for each other?
Only partially. A correlation of 0.75 means LQD and SHY share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
FAQ
What is the correlation between LQD and SHY?
As of 2026-08-27, the correlation of weekly returns between LQD and SHY is 0.75 over 3 years, 0.74 over 1 year and 0.67 over 5 years.
Is SHY a good diversifier for LQD?
Only partially. A correlation of 0.75 means LQD and SHY share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
What does a correlation of 0.75 mean?
Correlation ranges from −1 to +1. Values near +1 mean two assets move together, near 0 that they move independently, and negative values that they tend to move in opposite directions. It measures co-movement, not performance.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/lqd-vs-shy.json
Drop this badge in a README or notebook; it updates with the data:
[](https://www.pairbook.io/pair/lqd-vs-shy/)
No key needed, free to use. Full endpoint list in the API documentation.
Related comparisons
Hubs: LQD correlations · SHY correlations
