Correlation Between IShares Asia and IShares Core

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

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

Diversification Opportunities for IShares Asia and IShares Core

-0.43

Correlation Coefficient

IShares Asia  IShares Core

Very good diversification

The 3 months correlation between IShares and IShares is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia Property and iShares Core Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Corp 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 Property are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Corp has no effect on the direction of IShares Asia i.e., IShares Asia and IShares Core go up and down completely randomly.

Pair Corralation between IShares Asia and IShares Core

Assuming the 90 days trading horizon iShares Asia Property is expected to under-perform the IShares Core. In addition to that, IShares Asia is 1.3 times more volatile than iShares Core Corp. It trades about -0.02 of its total potential returns per unit of risk. iShares Core Corp is currently generating about 0.01 per unit of volatility. If you would invest  11,032  in iShares Core Corp on October 9, 2024 and sell it today you would earn a total of  332.00  from holding iShares Core Corp or generate 3.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.99%
Values	Daily Returns

iShares Asia Property  vs.  iShares Core Corp

iShares Asia Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Asia Property has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

iShares Core Corp

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with IShares Asia and IShares Core

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

The idea behind iShares Asia Property and iShares Core Corp 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.