Correlation Between Australian High and ISharesGlobal 100
Can any of the company-specific risk be diversified away by investing in both Australian High and ISharesGlobal 100 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 Australian High and ISharesGlobal 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian High Interest and iSharesGlobal 100, you can compare the effects of market volatilities on Australian High and ISharesGlobal 100 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 Australian High with a short position of ISharesGlobal 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian High and ISharesGlobal 100.
Diversification Opportunities for Australian High and ISharesGlobal 100
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Australian and ISharesGlobal is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Australian High Interest and iSharesGlobal 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSharesGlobal 100 and Australian High 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 Australian High Interest are associated (or correlated) with ISharesGlobal 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSharesGlobal 100 has no effect on the direction of Australian High i.e., Australian High and ISharesGlobal 100 go up and down completely randomly.
Pair Corralation between Australian High and ISharesGlobal 100
Assuming the 90 days trading horizon Australian High is expected to generate 21.22 times less return on investment than ISharesGlobal 100. But when comparing it to its historical volatility, Australian High Interest is 32.32 times less risky than ISharesGlobal 100. It trades about 0.75 of its potential returns per unit of risk. iSharesGlobal 100 is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 15,109 in iSharesGlobal 100 on September 24, 2024 and sell it today you would earn a total of 1,114 from holding iSharesGlobal 100 or generate 7.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian High Interest vs. iSharesGlobal 100
Performance |
| Timeline |
| Australian High Interest |
| iSharesGlobal 100 |
Australian High and ISharesGlobal 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian High and ISharesGlobal 100
The main advantage of trading using opposite Australian High and ISharesGlobal 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian High position performs unexpectedly, ISharesGlobal 100 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 ISharesGlobal 100 will offset losses from the drop in ISharesGlobal 100's long position.| Australian High vs. VanEck Global Listed | Australian High vs. BetaShares Crypto Innovators | Australian High vs. BetaShares Global Government | Australian High vs. BetaShares Geared Australian |
| ISharesGlobal 100 vs. iShares MSCI Emerging | ISharesGlobal 100 vs. Global X Hydrogen | ISharesGlobal 100 vs. Janus Henderson Sustainable | ISharesGlobal 100 vs. JPMorgan Equity Premium |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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