Correlation Between IShares Asia and BetaShares Crypto

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

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

Diversification Opportunities for IShares Asia and BetaShares Crypto

0.26

Correlation Coefficient

IShares Asia  BetaShares Crypto

Modest diversification

The 3 months correlation between IShares and BetaShares is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia 50 and BetaShares Crypto Innovators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Crypto and IShares 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 iShares Asia 50 are associated (or correlated) with BetaShares Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Crypto has no effect on the direction of IShares Asia i.e., IShares Asia and BetaShares Crypto go up and down completely randomly.

Pair Corralation between IShares Asia and BetaShares Crypto

Assuming the 90 days trading horizon IShares Asia is expected to generate 3.29 times less return on investment than BetaShares Crypto. But when comparing it to its historical volatility, iShares Asia 50 is 3.99 times less risky than BetaShares Crypto. It trades about 0.1 of its potential returns per unit of risk. BetaShares Crypto Innovators is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  395.00  in BetaShares Crypto Innovators on September 13, 2024 and sell it today you would earn a total of  393.00  from holding BetaShares Crypto Innovators or generate 99.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

iShares Asia 50  vs.  BetaShares Crypto Innovators

iShares Asia 50

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Asia 50 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Asia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BetaShares Crypto

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Crypto Innovators are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Crypto unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Asia and BetaShares Crypto

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

The idea behind iShares Asia 50 and BetaShares Crypto Innovators 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.