Correlation Between IShares Core and IShares BRIC
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core SP and iShares BRIC 50, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of IShares BRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares BRIC.
Diversification Opportunities for IShares Core and IShares BRIC
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP 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 Core 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 Core SP 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 Core i.e., IShares Core and IShares BRIC go up and down completely randomly.
Pair Corralation between IShares Core and IShares BRIC
Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.43 times more return on investment than IShares BRIC. However, iShares Core SP is 2.3 times less risky than IShares BRIC. It trades about 0.16 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 48,210 in iShares Core SP on September 4, 2024 and sell it today you would earn a total of 15,870 from holding iShares Core SP or generate 32.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. iShares BRIC 50
Performance |
| Timeline |
| iShares Core SP |
| iShares BRIC 50 |
IShares Core and IShares BRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares BRIC
The main advantage of trading using opposite IShares Core and IShares BRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core vs. iShares Corp Bond | IShares Core vs. iShares Emerging Asia | IShares Core vs. iShares MSCI Global | IShares Core vs. iShares VII PLC |
| IShares BRIC vs. Lyxor BEL 20 | IShares BRIC vs. iShares China Large | IShares BRIC vs. iShares II Public | IShares BRIC vs. iShares MSCI EM |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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