Correlation Between IShares Core and Betashares Asia

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

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

Diversification Opportunities for IShares Core and Betashares Asia

-0.7

Correlation Coefficient

IShares Core  Betashares Asia

Excellent diversification

The 3 months correlation between IShares and Betashares is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Betashares Asia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Asia Tech and IShares Core 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 Core SP are associated (or correlated) with Betashares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Asia Tech has no effect on the direction of IShares Core i.e., IShares Core and Betashares Asia go up and down completely randomly.

Pair Corralation between IShares Core and Betashares Asia

Assuming the 90 days trading horizon iShares Core SP is expected to under-perform the Betashares Asia. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core SP is 1.54 times less risky than Betashares Asia. The etf trades about -0.14 of its potential returns per unit of risk. The Betashares Asia Technology is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  947.00  in Betashares Asia Technology on December 2, 2024 and sell it today you would earn a total of  165.00  from holding Betashares Asia Technology or generate 17.42% return on investment over 90 days.

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

iShares Core SP  vs.  Betashares Asia Technology

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Betashares Asia Tech

Risk-Adjusted Performance

Good

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

Pair Trading with IShares Core and Betashares Asia

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

The idea behind iShares Core SP and Betashares Asia Technology 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.