Correlation Between IShares JP and IShares International
Can any of the company-specific risk be diversified away by investing in both IShares JP and IShares International 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 JP and IShares International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares JP Morgan and iShares International High, you can compare the effects of market volatilities on IShares JP and IShares International 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 JP with a short position of IShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares JP and IShares International.
Diversification Opportunities for IShares JP and IShares International
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan and iShares International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International and IShares JP 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 JP Morgan are associated (or correlated) with IShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares International has no effect on the direction of IShares JP i.e., IShares JP and IShares International go up and down completely randomly.
Pair Corralation between IShares JP and IShares International
Given the investment horizon of 90 days iShares JP Morgan is expected to generate 0.43 times more return on investment than IShares International. However, iShares JP Morgan is 2.35 times less risky than IShares International. It trades about 0.02 of its potential returns per unit of risk. iShares International High is currently generating about -0.16 per unit of risk. If you would invest 4,509 in iShares JP Morgan on August 30, 2024 and sell it today you would earn a total of 4.00 from holding iShares JP Morgan or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares JP Morgan vs. iShares International High
Performance |
| Timeline |
| iShares JP Morgan |
| iShares International |
IShares JP and IShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares JP and IShares International
The main advantage of trading using opposite IShares JP and IShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares JP position performs unexpectedly, IShares International 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 International will offset losses from the drop in IShares International's long position.| IShares JP vs. VanEck Emerging Markets | IShares JP vs. iShares Intl High | IShares JP vs. iShares International High |
| IShares International vs. iShares Intl High | IShares International vs. iShares JP Morgan | IShares International vs. VanEck International High | IShares International vs. iShares JP Morgan |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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