Correlation Between IShares China and IShares Ultrashort
Can any of the company-specific risk be diversified away by investing in both IShares China and IShares Ultrashort 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 Ultrashort 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 Ultrashort Bond, you can compare the effects of market volatilities on IShares China and IShares Ultrashort 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 Ultrashort. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and IShares Ultrashort.
Diversification Opportunities for IShares China and IShares Ultrashort
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding iShares China CNY and iShares Ultrashort Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Ultrashort Bond 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 Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Ultrashort Bond has no effect on the direction of IShares China i.e., IShares China and IShares Ultrashort go up and down completely randomly.
Pair Corralation between IShares China and IShares Ultrashort
Assuming the 90 days trading horizon IShares China is expected to generate 1.35 times less return on investment than IShares Ultrashort. In addition to that, IShares China is 3.18 times more volatile than iShares Ultrashort Bond. It trades about 0.06 of its total potential returns per unit of risk. iShares Ultrashort Bond is currently generating about 0.28 per unit of volatility. If you would invest 485.00 in iShares Ultrashort Bond on August 26, 2024 and sell it today you would earn a total of 28.00 from holding iShares Ultrashort Bond or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.33% |
| Values | Daily Returns |
iShares China CNY vs. iShares Ultrashort Bond
Performance |
| Timeline |
| iShares China CNY |
| iShares Ultrashort Bond |
IShares China and IShares Ultrashort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and IShares Ultrashort
The main advantage of trading using opposite IShares China and IShares Ultrashort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, IShares Ultrashort 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 Ultrashort will offset losses from the drop in IShares Ultrashort's long position.| IShares China vs. Vanguard SP 500 | IShares China vs. SPDR Dow Jones | IShares China vs. iShares SP 500 | IShares China vs. iShares China CNY |
| IShares Ultrashort vs. iShares III Public | IShares Ultrashort vs. iShares Core MSCI | IShares Ultrashort vs. iShares France Govt | IShares Ultrashort vs. iShares Edge MSCI |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |