Correlation Between BetaShares Global and IShares Core
Can any of the company-specific risk be diversified away by investing in both BetaShares Global 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 Global 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 Global Banks and iShares Core SP, you can compare the effects of market volatilities on BetaShares Global 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 Global with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Global and IShares Core.
Diversification Opportunities for BetaShares Global and IShares Core
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BetaShares and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Global Banks and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and BetaShares Global 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 Global Banks 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 SP has no effect on the direction of BetaShares Global i.e., BetaShares Global and IShares Core go up and down completely randomly.
Pair Corralation between BetaShares Global and IShares Core
Assuming the 90 days trading horizon BetaShares Global Banks is expected to generate 1.01 times more return on investment than IShares Core. However, BetaShares Global is 1.01 times more volatile than iShares Core SP. It trades about 0.3 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.23 per unit of risk. If you would invest 811.00 in BetaShares Global Banks on August 29, 2024 and sell it today you would earn a total of 54.00 from holding BetaShares Global Banks or generate 6.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Global Banks vs. iShares Core SP
Performance |
| Timeline |
| BetaShares Global Banks |
| iShares Core SP |
BetaShares Global and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Global and IShares Core
The main advantage of trading using opposite BetaShares Global and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Global 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.The idea behind BetaShares Global Banks and iShares Core SP 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.
| IShares Core vs. iShares MSCI Emerging | IShares Core vs. iShares Global Aggregate | IShares Core vs. iShares CoreSP MidCap | IShares Core vs. iShares SP 500 |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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