Correlation Between IShares VII and IShares Nikkei
Can any of the company-specific risk be diversified away by investing in both IShares VII and IShares Nikkei 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 VII and IShares Nikkei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares VII PLC and iShares Nikkei 225, you can compare the effects of market volatilities on IShares VII and IShares Nikkei 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 VII with a short position of IShares Nikkei. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and IShares Nikkei.
Diversification Opportunities for IShares VII and IShares Nikkei
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and iShares Nikkei 225 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Nikkei 225 and IShares VII 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 VII PLC are associated (or correlated) with IShares Nikkei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Nikkei 225 has no effect on the direction of IShares VII i.e., IShares VII and IShares Nikkei go up and down completely randomly.
Pair Corralation between IShares VII and IShares Nikkei
Assuming the 90 days trading horizon iShares VII PLC is expected to under-perform the IShares Nikkei. But the etf apears to be less risky and, when comparing its historical volatility, iShares VII PLC is 1.03 times less risky than IShares Nikkei. The etf trades about -0.12 of its potential returns per unit of risk. The iShares Nikkei 225 is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 2,409 in iShares Nikkei 225 on December 30, 2024 and sell it today you would lose (164.00) from holding iShares Nikkei 225 or give up 6.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
iShares VII PLC vs. iShares Nikkei 225
Performance |
Timeline |
iShares VII PLC |
iShares Nikkei 225 |
IShares VII and IShares Nikkei Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares VII and IShares Nikkei
The main advantage of trading using opposite IShares VII and IShares Nikkei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII position performs unexpectedly, IShares Nikkei 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 Nikkei will offset losses from the drop in IShares Nikkei's long position.IShares VII vs. iShares Govt Bond | IShares VII vs. iShares Global AAA AA | IShares VII vs. iShares Smart City | IShares VII vs. iShares Broad High |
IShares Nikkei vs. iShares Govt Bond | IShares Nikkei vs. iShares Global AAA AA | IShares Nikkei vs. iShares Smart City | IShares Nikkei vs. iShares Broad High |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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