Correlation Between IShares Asia and BetaShares Australian
Can any of the company-specific risk be diversified away by investing in both IShares Asia and BetaShares Australian 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 Asia and BetaShares Australian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Asia 50 and BetaShares Australian Government, you can compare the effects of market volatilities on IShares Asia and BetaShares Australian 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 Asia with a short position of BetaShares Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Asia and BetaShares Australian.
Diversification Opportunities for IShares Asia and BetaShares Australian
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and BetaShares is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia 50 and BetaShares Australian Governme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Australian and IShares Asia 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 Asia 50 are associated (or correlated) with BetaShares Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Australian has no effect on the direction of IShares Asia i.e., IShares Asia and BetaShares Australian go up and down completely randomly.
Pair Corralation between IShares Asia and BetaShares Australian
Assuming the 90 days trading horizon iShares Asia 50 is expected to under-perform the BetaShares Australian. In addition to that, IShares Asia is 2.23 times more volatile than BetaShares Australian Government. It trades about -0.28 of its total potential returns per unit of risk. BetaShares Australian Government is currently generating about 0.1 per unit of volatility. If you would invest 4,099 in BetaShares Australian Government on August 29, 2024 and sell it today you would earn a total of 29.00 from holding BetaShares Australian Government or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Asia 50 vs. BetaShares Australian Governme
Performance |
| Timeline |
| iShares Asia 50 |
| BetaShares Australian |
IShares Asia and BetaShares Australian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Asia and BetaShares Australian
The main advantage of trading using opposite IShares Asia and BetaShares Australian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Asia position performs unexpectedly, BetaShares Australian 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 BetaShares Australian will offset losses from the drop in BetaShares Australian's long position.| IShares Asia vs. iShares MSCI Emerging | IShares Asia vs. iShares Global Aggregate | IShares Asia vs. iShares CoreSP MidCap | IShares Asia 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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