Correlation Between IShares China and CHIS
Can any of the company-specific risk be diversified away by investing in both IShares China and CHIS 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 CHIS 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 CHIS, you can compare the effects of market volatilities on IShares China and CHIS 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 CHIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and CHIS.
Diversification Opportunities for IShares China and CHIS
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and CHIS is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares China Large Cap and CHIS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIS 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 CHIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIS has no effect on the direction of IShares China i.e., IShares China and CHIS go up and down completely randomly.
Pair Corralation between IShares China and CHIS
Considering the 90-day investment horizon iShares China Large Cap is expected to generate 1.41 times more return on investment than CHIS. However, IShares China is 1.41 times more volatile than CHIS. It trades about 0.02 of its potential returns per unit of risk. CHIS is currently generating about -0.05 per unit of risk. If you would invest 2,741 in iShares China Large Cap on September 3, 2024 and sell it today you would earn a total of 290.00 from holding iShares China Large Cap or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 30.91% |
| Values | Daily Returns |
iShares China Large Cap vs. CHIS
Performance |
| Timeline |
| iShares China Large |
| CHIS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares China and CHIS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and CHIS
The main advantage of trading using opposite IShares China and CHIS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, CHIS 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 CHIS will offset losses from the drop in CHIS's long position.| IShares China vs. Franklin FTSE South | IShares China vs. Franklin FTSE Japan | IShares China vs. Franklin FTSE India | IShares China vs. Franklin FTSE Brazil |
| CHIS vs. Franklin FTSE South | CHIS vs. Franklin FTSE Japan | CHIS vs. Franklin FTSE India | CHIS vs. Franklin FTSE Brazil |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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