Correlation Between IShares Property and IShares BRIC

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

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

Diversification Opportunities for IShares Property and IShares BRIC

-0.03

Correlation Coefficient

IShares Property  IShares BRIC

Good diversification

The 3 months correlation between IShares and IShares is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding iShares Property Yield and iShares BRIC 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares BRIC 50 and IShares Property 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 Property Yield are associated (or correlated) with IShares BRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares BRIC 50 has no effect on the direction of IShares Property i.e., IShares Property and IShares BRIC go up and down completely randomly.

Pair Corralation between IShares Property and IShares BRIC

If you would invest (100.00) in iShares BRIC 50 on October 7, 2024 and sell it today you would earn a total of  100.00  from holding iShares BRIC 50 or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

iShares Property Yield  vs.  iShares BRIC 50

iShares Property Yield

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares BRIC 50

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares BRIC 50 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares BRIC 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 Property and IShares BRIC

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

The idea behind iShares Property Yield and iShares BRIC 50 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.