Correlation Between Betashares Asia and IShares Global

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

By analyzing existing cross correlation between Betashares Asia Technology and iShares Global Healthcare, you can compare the effects of market volatilities on Betashares Asia and IShares Global 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 Betashares Asia with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Betashares Asia and IShares Global.

Diversification Opportunities for Betashares Asia and IShares Global

-0.13

Correlation Coefficient

Betashares Asia  IShares Global

Good diversification

The 3 months correlation between Betashares and IShares is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Betashares Asia Technology and iShares Global Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Healthcare and Betashares Asia 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 Betashares Asia Technology are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Healthcare has no effect on the direction of Betashares Asia i.e., Betashares Asia and IShares Global go up and down completely randomly.

Pair Corralation between Betashares Asia and IShares Global

Assuming the 90 days trading horizon Betashares Asia Technology is expected to generate 1.36 times more return on investment than IShares Global. However, Betashares Asia is 1.36 times more volatile than iShares Global Healthcare. It trades about 0.14 of its potential returns per unit of risk. iShares Global Healthcare is currently generating about -0.16 per unit of risk. If you would invest  975.00  in Betashares Asia Technology on October 5, 2024 and sell it today you would earn a total of  27.00  from holding Betashares Asia Technology or generate 2.77% return on investment over 90 days.

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

Betashares Asia Technology  vs.  iShares Global Healthcare

Betashares Asia Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Betashares Asia Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Betashares Asia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares Global Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking indicators, IShares Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Betashares Asia and IShares Global

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

The idea behind Betashares Asia Technology and iShares Global Healthcare 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.