Correlation Between IShares Asia and GOOD BUILDINGS

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

By analyzing existing cross correlation between iShares Asia Pacific and GOOD BUILDINGS Swiss, you can compare the effects of market volatilities on IShares Asia and GOOD BUILDINGS 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 GOOD BUILDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Asia and GOOD BUILDINGS.

Diversification Opportunities for IShares Asia and GOOD BUILDINGS

-0.68

Correlation Coefficient

IShares Asia  GOOD BUILDINGS

Excellent diversification

The 3 months correlation between IShares and GOOD is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia Pacific and GOOD BUILDINGS Swiss in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOOD BUILDINGS Swiss 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 Pacific are associated (or correlated) with GOOD BUILDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOOD BUILDINGS Swiss has no effect on the direction of IShares Asia i.e., IShares Asia and GOOD BUILDINGS go up and down completely randomly.

Pair Corralation between IShares Asia and GOOD BUILDINGS

If you would invest  12,710  in GOOD BUILDINGS Swiss on October 21, 2024 and sell it today you would earn a total of  2,790  from holding GOOD BUILDINGS Swiss or generate 21.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.2%
Values	Daily Returns

iShares Asia Pacific  vs.  GOOD BUILDINGS Swiss

iShares Asia Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Asia Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares Asia is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GOOD BUILDINGS Swiss

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GOOD BUILDINGS Swiss are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady basic indicators, GOOD BUILDINGS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IShares Asia and GOOD BUILDINGS

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

The idea behind iShares Asia Pacific and GOOD BUILDINGS Swiss 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.