Correlation Between IShares Core and IShares International
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares International 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 International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core High and iShares International Select, you can compare the effects of market volatilities on IShares Core and IShares International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares International.
Diversification Opportunities for IShares Core and IShares International
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core High and iShares International Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International 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 High are associated (or correlated) with IShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares International has no effect on the direction of IShares Core i.e., IShares Core and IShares International go up and down completely randomly.
Pair Corralation between IShares Core and IShares International
Considering the 90-day investment horizon iShares Core High is expected to generate 0.81 times more return on investment than IShares International. However, iShares Core High is 1.24 times less risky than IShares International. It trades about 0.08 of its potential returns per unit of risk. iShares International Select is currently generating about 0.05 per unit of risk. If you would invest 9,139 in iShares Core High on November 1, 2024 and sell it today you would earn a total of 2,441 from holding iShares Core High or generate 26.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core High vs. iShares International Select
Performance |
| Timeline |
| iShares Core High |
| iShares International |
IShares Core and IShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares International
The main advantage of trading using opposite IShares Core and IShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares International 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 International will offset losses from the drop in IShares International's long position.| IShares Core vs. iShares Core Dividend | IShares Core vs. SPDR Portfolio SP | IShares Core vs. iShares Select Dividend | IShares Core vs. SPDR SP Dividend |
| IShares International vs. iShares Core High | IShares International vs. SPDR SP International | IShares International vs. iShares Select Dividend | IShares International vs. iShares Emerging Markets |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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