Correlation Between BetaShares Geared and IShares Core
Can any of the company-specific risk be diversified away by investing in both BetaShares Geared and IShares Core 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 BetaShares Geared and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Geared Australian and iShares Core SP, you can compare the effects of market volatilities on BetaShares Geared and IShares Core 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 BetaShares Geared with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Geared and IShares Core.
Diversification Opportunities for BetaShares Geared and IShares Core
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BetaShares and IShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Australian and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and BetaShares Geared 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 BetaShares Geared Australian are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and IShares Core go up and down completely randomly.
Pair Corralation between BetaShares Geared and IShares Core
Assuming the 90 days trading horizon BetaShares Geared is expected to generate 1.02 times less return on investment than IShares Core. In addition to that, BetaShares Geared is 1.47 times more volatile than iShares Core SP. It trades about 0.13 of its total potential returns per unit of risk. iShares Core SP is currently generating about 0.2 per unit of volatility. If you would invest 5,901 in iShares Core SP on August 29, 2024 and sell it today you would earn a total of 249.00 from holding iShares Core SP or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Geared Australian vs. iShares Core SP
Performance |
| Timeline |
| BetaShares Geared |
| iShares Core SP |
BetaShares Geared and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Geared and IShares Core
The main advantage of trading using opposite BetaShares Geared and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Geared position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.The idea behind BetaShares Geared Australian and iShares Core SP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| IShares Core vs. iShares MSCI Emerging | IShares Core vs. iShares Global Aggregate | IShares Core vs. iShares CoreSP MidCap | IShares Core vs. iShares SP 500 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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