Correlation Between SmartETFs Asia and IShares Asia
Can any of the company-specific risk be diversified away by investing in both SmartETFs Asia and IShares 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 SmartETFs Asia and IShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SmartETFs Asia Pacific and iShares Asia 50, you can compare the effects of market volatilities on SmartETFs Asia and IShares 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 SmartETFs Asia with a short position of IShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SmartETFs Asia and IShares Asia.
Diversification Opportunities for SmartETFs Asia and IShares Asia
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SmartETFs and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SmartETFs Asia Pacific and iShares Asia 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia 50 and SmartETFs Asia 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 SmartETFs Asia Pacific are associated (or correlated) with IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia 50 has no effect on the direction of SmartETFs Asia i.e., SmartETFs Asia and IShares Asia go up and down completely randomly.
Pair Corralation between SmartETFs Asia and IShares Asia
Given the investment horizon of 90 days SmartETFs Asia Pacific is expected to generate 0.74 times more return on investment than IShares Asia. However, SmartETFs Asia Pacific is 1.35 times less risky than IShares Asia. It trades about -0.16 of its potential returns per unit of risk. iShares Asia 50 is currently generating about -0.18 per unit of risk. If you would invest 1,602 in SmartETFs Asia Pacific on August 29, 2024 and sell it today you would lose (64.00) from holding SmartETFs Asia Pacific or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SmartETFs Asia Pacific vs. iShares Asia 50
Performance |
| Timeline |
| SmartETFs Asia Pacific |
| iShares Asia 50 |
SmartETFs Asia and IShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SmartETFs Asia and IShares Asia
The main advantage of trading using opposite SmartETFs Asia and IShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SmartETFs Asia position performs unexpectedly, IShares 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 IShares Asia will offset losses from the drop in IShares Asia's long position.| SmartETFs Asia vs. SmartETFs Dividend Builder | SmartETFs Asia vs. Anfield Dynamic Fixed | SmartETFs Asia vs. Anfield Universal Fixed | SmartETFs Asia vs. Aptus Drawdown Managed |
| IShares Asia vs. Alliancebernstein National Municipal | IShares Asia vs. Armada Hflr Pr | IShares Asia vs. Aberdeen Global Dynamic |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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