Correlation Between IShares Asia and IShares Global
Can any of the company-specific risk be diversified away by investing in both IShares 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 IShares 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 iShares Asia 50 and iShares Global Consumer, you can compare the effects of market volatilities on IShares 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 IShares Asia with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Asia and IShares Global.
Diversification Opportunities for IShares Asia and IShares Global
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia 50 and iShares Global Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Consumer 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 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 Consumer has no effect on the direction of IShares Asia i.e., IShares Asia and IShares Global go up and down completely randomly.
Pair Corralation between IShares Asia and IShares Global
Assuming the 90 days trading horizon iShares Asia 50 is expected to generate 1.5 times more return on investment than IShares Global. However, IShares Asia is 1.5 times more volatile than iShares Global Consumer. It trades about 0.07 of its potential returns per unit of risk. iShares Global Consumer is currently generating about 0.06 per unit of risk. If you would invest 8,400 in iShares Asia 50 on December 2, 2024 and sell it today you would earn a total of 3,363 from holding iShares Asia 50 or generate 40.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Asia 50 vs. iShares Global Consumer
Performance |
Timeline |
iShares Asia 50 |
iShares Global Consumer |
IShares Asia and IShares Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Asia and IShares Global
The main advantage of trading using opposite IShares Asia and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 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.IShares Asia vs. iShares MSCI Emerging | IShares Asia vs. iShares Global Aggregate | IShares Asia vs. iShares CoreSP MidCap | IShares Asia vs. iShares SP 500 |
IShares Global vs. iShares MSCI Emerging | IShares Global vs. iShares Global Aggregate | IShares Global vs. iShares CoreSP MidCap | IShares Global vs. iShares SP 500 |
Check out your portfolio center.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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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