Correlation Between DSJA and IShares International
Can any of the company-specific risk be diversified away by investing in both DSJA and IShares International 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 DSJA and IShares International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSJA and iShares International Select, you can compare the effects of market volatilities on DSJA and IShares International 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 DSJA with a short position of IShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSJA and IShares International.
Diversification Opportunities for DSJA and IShares International
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DSJA and IShares is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding DSJA and iShares International Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International and DSJA 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 DSJA are associated (or correlated) with IShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares International has no effect on the direction of DSJA i.e., DSJA and IShares International go up and down completely randomly.
Pair Corralation between DSJA and IShares International
Given the investment horizon of 90 days DSJA is expected to generate 0.83 times more return on investment than IShares International. However, DSJA is 1.2 times less risky than IShares International. It trades about 0.14 of its potential returns per unit of risk. iShares International Select is currently generating about 0.04 per unit of risk. If you would invest 2,468 in DSJA on August 30, 2024 and sell it today you would earn a total of 397.00 from holding DSJA or generate 16.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.25% |
| Values | Daily Returns |
DSJA vs. iShares International Select
Performance |
| Timeline |
| DSJA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| iShares International |
DSJA and IShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSJA and IShares International
The main advantage of trading using opposite DSJA and IShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSJA position performs unexpectedly, IShares International 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 International will offset losses from the drop in IShares International's long position.The idea behind DSJA and iShares International Select pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares International vs. iShares Core High | IShares International vs. SPDR SP International | IShares International vs. iShares Select Dividend | IShares International vs. iShares Emerging Markets |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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