Correlation Between IShares Trust and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Alibaba Group 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 Trust and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Alibaba Group Holding, you can compare the effects of market volatilities on IShares Trust and Alibaba Group 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 Trust with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Alibaba Group.
Diversification Opportunities for IShares Trust and Alibaba Group
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Alibaba is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and IShares Trust 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 Trust are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of IShares Trust i.e., IShares Trust and Alibaba Group go up and down completely randomly.
Pair Corralation between IShares Trust and Alibaba Group
Assuming the 90 days trading horizon iShares Trust is expected to generate 0.32 times more return on investment than Alibaba Group. However, iShares Trust is 3.13 times less risky than Alibaba Group. It trades about 0.15 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.27 per unit of risk. If you would invest 180,200 in iShares Trust on August 25, 2024 and sell it today you would earn a total of 3,484 from holding iShares Trust or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
iShares Trust vs. Alibaba Group Holding
Performance |
| Timeline |
| iShares Trust |
| Alibaba Group Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
IShares Trust and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Alibaba Group
The main advantage of trading using opposite IShares Trust and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| IShares Trust vs. Vanguard Index Funds | IShares Trust vs. Vanguard Index Funds | IShares Trust vs. SPDR SP 500 | IShares Trust vs. iShares Trust |
| Alibaba Group vs. First Republic Bank | Alibaba Group vs. Micron Technology | Alibaba Group vs. Lloyds Banking Group | Alibaba Group vs. Delta Air Lines |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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