Correlation Between IShares VII and IShares BRIC
Can any of the company-specific risk be diversified away by investing in both IShares VII and IShares BRIC 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 VII and IShares BRIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares VII PLC and iShares BRIC 50, you can compare the effects of market volatilities on IShares VII and IShares BRIC 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 VII with a short position of IShares BRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and IShares BRIC.
Diversification Opportunities for IShares VII and IShares BRIC
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and iShares BRIC 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares BRIC 50 and IShares VII 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 VII PLC are associated (or correlated) with IShares BRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares BRIC 50 has no effect on the direction of IShares VII i.e., IShares VII and IShares BRIC go up and down completely randomly.
Pair Corralation between IShares VII and IShares BRIC
Assuming the 90 days trading horizon iShares VII PLC is expected to generate 0.8 times more return on investment than IShares BRIC. However, iShares VII PLC is 1.25 times less risky than IShares BRIC. It trades about 0.06 of its potential returns per unit of risk. iShares BRIC 50 is currently generating about 0.04 per unit of risk. If you would invest 3,215,000 in iShares VII PLC on September 2, 2024 and sell it today you would earn a total of 641,500 from holding iShares VII PLC or generate 19.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares VII PLC vs. iShares BRIC 50
Performance |
| Timeline |
| iShares VII PLC |
| iShares BRIC 50 |
IShares VII and IShares BRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares VII and IShares BRIC
The main advantage of trading using opposite IShares VII and IShares BRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII position performs unexpectedly, IShares BRIC 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 BRIC will offset losses from the drop in IShares BRIC's long position.| IShares VII vs. iShares Corp Bond | IShares VII vs. iShares Emerging Asia | IShares VII vs. iShares MSCI Global | IShares VII vs. iShares VII PLC |
| IShares BRIC vs. iShares Core SP | IShares BRIC vs. iShares Core MSCI | IShares BRIC vs. Lyxor UCITS Stoxx |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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