Correlation Between BetaShares Australia and IShares Core
Can any of the company-specific risk be diversified away by investing in both BetaShares Australia 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 BetaShares Australia and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Australia 200 and iShares Core Cash, you can compare the effects of market volatilities on BetaShares Australia 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 BetaShares Australia with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Australia and IShares Core.
Diversification Opportunities for BetaShares Australia and IShares Core
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BetaShares and IShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Australia 200 and iShares Core Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Cash and BetaShares Australia 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 BetaShares Australia 200 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 Cash has no effect on the direction of BetaShares Australia i.e., BetaShares Australia and IShares Core go up and down completely randomly.
Pair Corralation between BetaShares Australia and IShares Core
Assuming the 90 days trading horizon BetaShares Australia is expected to generate 19.51 times less return on investment than IShares Core. But when comparing it to its historical volatility, BetaShares Australia 200 is 29.34 times less risky than IShares Core. It trades about 0.07 of its potential returns per unit of risk. iShares Core Cash is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,280 in iShares Core Cash on August 29, 2024 and sell it today you would earn a total of 783.00 from holding iShares Core Cash or generate 8.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
BetaShares Australia 200 vs. iShares Core Cash
Performance |
| Timeline |
| BetaShares Australia 200 |
| iShares Core Cash |
BetaShares Australia and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Australia and IShares Core
The main advantage of trading using opposite BetaShares Australia and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Australia 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.| BetaShares Australia vs. SPDR SP 500 | BetaShares Australia vs. Vanguard Total Market | BetaShares Australia vs. iShares Core SP | BetaShares Australia vs. iShares Core SP |
| IShares Core vs. Betashares Asia Technology | IShares Core vs. CD Private Equity | IShares Core vs. BetaShares Australia 200 | IShares Core vs. Australian High Interest |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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