Correlation Between IShares Core and IShares Asia
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares Asia 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 Asia 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 Asia Pacific, you can compare the effects of market volatilities on IShares Core and IShares Asia 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 Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares Asia.
Diversification Opportunities for IShares Core and IShares Asia
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and iShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia Pacific 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 Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia Pacific has no effect on the direction of IShares Core i.e., IShares Core and IShares Asia go up and down completely randomly.
Pair Corralation between IShares Core and IShares Asia
Assuming the 90 days trading horizon iShares Core MSCI is expected to under-perform the IShares Asia. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core MSCI is 1.05 times less risky than IShares Asia. The etf trades about -0.08 of its potential returns per unit of risk. The iShares Asia Pacific is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,196 in iShares Asia Pacific on August 24, 2024 and sell it today you would earn a total of 59.00 from holding iShares Asia Pacific or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. iShares Asia Pacific
Performance |
| Timeline |
| iShares Core MSCI |
| iShares Asia Pacific |
IShares Core and IShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares Asia
The main advantage of trading using opposite IShares Core and IShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares Asia 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 Asia will offset losses from the drop in IShares Asia's long position.| IShares Core vs. iShares III Public | IShares Core vs. iShares France Govt | IShares Core vs. iShares Edge MSCI | IShares Core vs. iShares Core FTSE |
| IShares Asia vs. iShares III Public | IShares Asia vs. iShares Core MSCI | IShares Asia vs. iShares France Govt | IShares Asia vs. iShares Edge MSCI |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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