Correlation Between BetaShares Global and IShares Global
Can any of the company-specific risk be diversified away by investing in both BetaShares Global and IShares Global 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 Global and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Global Government and iShares Global Healthcare, you can compare the effects of market volatilities on BetaShares Global and IShares Global 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 Global with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Global and IShares Global.
Diversification Opportunities for BetaShares Global and IShares Global
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BetaShares and IShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Global Government and iShares Global Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Healthcare and BetaShares Global 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 Global Government are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Healthcare has no effect on the direction of BetaShares Global i.e., BetaShares Global and IShares Global go up and down completely randomly.
Pair Corralation between BetaShares Global and IShares Global
Assuming the 90 days trading horizon BetaShares Global Government is expected to generate 0.87 times more return on investment than IShares Global. However, BetaShares Global Government is 1.15 times less risky than IShares Global. It trades about 0.04 of its potential returns per unit of risk. iShares Global Healthcare is currently generating about -0.13 per unit of risk. If you would invest 1,374 in BetaShares Global Government on August 29, 2024 and sell it today you would earn a total of 10.00 from holding BetaShares Global Government or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Global Government vs. iShares Global Healthcare
Performance |
| Timeline |
| BetaShares Global |
| iShares Global Healthcare |
BetaShares Global and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Global and IShares Global
The main advantage of trading using opposite BetaShares Global and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Global position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.The idea behind BetaShares Global Government and iShares Global Healthcare 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 Global vs. iShares MSCI Emerging | IShares Global vs. iShares Global Aggregate | IShares Global vs. iShares CoreSP MidCap | IShares Global 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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