Correlation Between BetaShares Geared and IShares Asia

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

By analyzing existing cross correlation between BetaShares Geared Equity and iShares Asia 50, you can compare the effects of market volatilities on BetaShares Geared and IShares Asia 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 Geared with a short position of IShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Geared and IShares Asia.

Diversification Opportunities for BetaShares Geared and IShares Asia

0.48

Correlation Coefficient

BetaShares Geared  IShares Asia

Very weak diversification

The 3 months correlation between BetaShares and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Equity and iShares Asia 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia 50 and BetaShares Geared 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 Geared Equity are associated (or correlated) with IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia 50 has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and IShares Asia go up and down completely randomly.

Pair Corralation between BetaShares Geared and IShares Asia

Assuming the 90 days trading horizon BetaShares Geared Equity is expected to generate 1.68 times more return on investment than IShares Asia. However, BetaShares Geared is 1.68 times more volatile than iShares Asia 50. It trades about 0.1 of its potential returns per unit of risk. iShares Asia 50 is currently generating about 0.06 per unit of risk. If you would invest  2,088  in BetaShares Geared Equity on September 12, 2024 and sell it today you would earn a total of  2,599  from holding BetaShares Geared Equity or generate 124.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

BetaShares Geared Equity  vs.  iShares Asia 50

BetaShares Geared Equity

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Geared Equity are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Geared unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares Asia 50

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Asia 50 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Asia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BetaShares Geared and IShares Asia

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

The idea behind BetaShares Geared Equity and iShares Asia 50 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.