Correlation Between IShares China and CHIR
Can any of the company-specific risk be diversified away by investing in both IShares China and CHIR 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 China and CHIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares China Large Cap and CHIR, you can compare the effects of market volatilities on IShares China and CHIR 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 China with a short position of CHIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and CHIR.
Diversification Opportunities for IShares China and CHIR
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and CHIR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares China Large Cap and CHIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIR and IShares China 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 China Large Cap are associated (or correlated) with CHIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIR has no effect on the direction of IShares China i.e., IShares China and CHIR go up and down completely randomly.
Pair Corralation between IShares China and CHIR
If you would invest 3,042 in iShares China Large Cap on October 21, 2024 and sell it today you would lose (1.00) from holding iShares China Large Cap or give up 0.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.26% |
| Values | Daily Returns |
iShares China Large Cap vs. CHIR
Performance |
| Timeline |
| iShares China Large |
| CHIR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares China and CHIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and CHIR
The main advantage of trading using opposite IShares China and CHIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, CHIR 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 CHIR will offset losses from the drop in CHIR's long position.| IShares China vs. iShares MSCI Brazil | IShares China vs. iShares MSCI Emerging | IShares China vs. iShares MSCI Japan | IShares China vs. iShares MSCI Hong |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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