Correlation Between IShares China and IShares AEX
Can any of the company-specific risk be diversified away by investing in both IShares China and IShares AEX 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 China and IShares AEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares China CNY and iShares AEX UCITS, you can compare the effects of market volatilities on IShares China and IShares AEX 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 China with a short position of IShares AEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and IShares AEX.
Diversification Opportunities for IShares China and IShares AEX
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares China CNY and iShares AEX UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares AEX UCITS and IShares China 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 China CNY are associated (or correlated) with IShares AEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares AEX UCITS has no effect on the direction of IShares China i.e., IShares China and IShares AEX go up and down completely randomly.
Pair Corralation between IShares China and IShares AEX
Assuming the 90 days trading horizon iShares China CNY is expected to generate 0.44 times more return on investment than IShares AEX. However, iShares China CNY is 2.28 times less risky than IShares AEX. It trades about -0.04 of its potential returns per unit of risk. iShares AEX UCITS is currently generating about -0.07 per unit of risk. If you would invest 535.00 in iShares China CNY on September 13, 2024 and sell it today you would lose (3.00) from holding iShares China CNY or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares China CNY vs. iShares AEX UCITS
Performance |
| Timeline |
| iShares China CNY |
| iShares AEX UCITS |
IShares China and IShares AEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and IShares AEX
The main advantage of trading using opposite IShares China and IShares AEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, IShares AEX 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 AEX will offset losses from the drop in IShares AEX's long position.| IShares China vs. iShares China CNY | IShares China vs. iShares Core FTSE | IShares China vs. iShares MSCI EM | IShares China vs. iShares MSCI China |
| IShares AEX vs. Vanguard SP 500 | IShares AEX vs. iShares II Public | IShares AEX vs. Vanguard FTSE All World | IShares AEX 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |