Correlation Between IShares Asia and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both IShares Asia and Vanguard FTSE 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 Vanguard FTSE 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 Vanguard FTSE Europe, you can compare the effects of market volatilities on IShares Asia and Vanguard FTSE 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 Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Asia and Vanguard FTSE.
Diversification Opportunities for IShares Asia and Vanguard FTSE
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Vanguard is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia 50 and Vanguard FTSE Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Europe 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 Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Europe has no effect on the direction of IShares Asia i.e., IShares Asia and Vanguard FTSE go up and down completely randomly.
Pair Corralation between IShares Asia and Vanguard FTSE
Assuming the 90 days trading horizon iShares Asia 50 is expected to generate 1.93 times more return on investment than Vanguard FTSE. However, IShares Asia is 1.93 times more volatile than Vanguard FTSE Europe. It trades about 0.06 of its potential returns per unit of risk. Vanguard FTSE Europe is currently generating about -0.03 per unit of risk. If you would invest 9,597 in iShares Asia 50 on August 29, 2024 and sell it today you would earn a total of 858.00 from holding iShares Asia 50 or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Asia 50 vs. Vanguard FTSE Europe
Performance |
| Timeline |
| iShares Asia 50 |
| Vanguard FTSE Europe |
IShares Asia and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Asia and Vanguard FTSE
The main advantage of trading using opposite IShares Asia and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Asia position performs unexpectedly, Vanguard FTSE 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 Vanguard FTSE will offset losses from the drop in Vanguard FTSE'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 |
| Vanguard FTSE vs. BetaShares Global Government | Vanguard FTSE vs. BetaShares Geared Australian | Vanguard FTSE vs. Global X Semiconductor | Vanguard FTSE vs. iShares UBS Government |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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