Correlation Between IShares Core and IShares China
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares China 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 China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and iShares China CNY, you can compare the effects of market volatilities on IShares Core and IShares China 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 China. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares China.
Diversification Opportunities for IShares Core and IShares China
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and iShares China CNY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China CNY 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 MSCI are associated (or correlated) with IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China CNY has no effect on the direction of IShares Core i.e., IShares Core and IShares China go up and down completely randomly.
Pair Corralation between IShares Core and IShares China
Assuming the 90 days trading horizon iShares Core MSCI is expected to generate 1.91 times more return on investment than IShares China. However, IShares Core is 1.91 times more volatile than iShares China CNY. It trades about 0.05 of its potential returns per unit of risk. iShares China CNY is currently generating about -0.08 per unit of risk. If you would invest 3,253 in iShares Core MSCI on September 1, 2024 and sell it today you would earn a total of 26.00 from holding iShares Core MSCI or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Core MSCI vs. iShares China CNY
Performance |
| Timeline |
| iShares Core MSCI |
| iShares China CNY |
IShares Core and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares China
The main advantage of trading using opposite IShares Core and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares China 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 China will offset losses from the drop in IShares China's long position.| IShares Core vs. BlackRock ESG Multi Asset | IShares Core vs. Pershing Square Holdings | IShares Core vs. ASML Holding NV | IShares Core vs. Koninklijke Philips NV |
| IShares China vs. iShares Core MSCI | IShares China vs. BlackRock ESG Multi Asset | IShares China vs. Pershing Square Holdings | IShares China vs. ASML Holding NV |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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