Correlation Between IShares Core and IShares Emerging
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares Emerging 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 Emerging 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 Emerging Asia, you can compare the effects of market volatilities on IShares Core and IShares Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares Emerging.
Diversification Opportunities for IShares Core and IShares Emerging
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and iShares Emerging Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Emerging Asia 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Emerging Asia has no effect on the direction of IShares Core i.e., IShares Core and IShares Emerging go up and down completely randomly.
Pair Corralation between IShares Core and IShares Emerging
Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.99 times more return on investment than IShares Emerging. However, iShares Core SP is 1.01 times less risky than IShares Emerging. It trades about 0.12 of its potential returns per unit of risk. iShares Emerging Asia is currently generating about -0.01 per unit of risk. If you would invest 42,690 in iShares Core SP on September 1, 2024 and sell it today you would earn a total of 21,270 from holding iShares Core SP or generate 49.82% 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 Emerging Asia
Performance |
| Timeline |
| iShares Core SP |
| iShares Emerging Asia |
IShares Core and IShares Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares Emerging
The main advantage of trading using opposite IShares Core and IShares Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares Emerging 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 Emerging will offset losses from the drop in IShares Emerging'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 Emerging vs. iShares Core SP | IShares Emerging vs. iShares Core MSCI | IShares Emerging 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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