Correlation Between IShares Asia and Koninklijke Vopak
Can any of the company-specific risk be diversified away by investing in both IShares Asia and Koninklijke Vopak 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 Koninklijke Vopak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Asia Pacific and Koninklijke Vopak NV, you can compare the effects of market volatilities on IShares Asia and Koninklijke Vopak 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 Koninklijke Vopak. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Asia and Koninklijke Vopak.
Diversification Opportunities for IShares Asia and Koninklijke Vopak
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Koninklijke is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia Pacific and Koninklijke Vopak NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Vopak 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 Pacific are associated (or correlated) with Koninklijke Vopak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Vopak has no effect on the direction of IShares Asia i.e., IShares Asia and Koninklijke Vopak go up and down completely randomly.
Pair Corralation between IShares Asia and Koninklijke Vopak
Assuming the 90 days trading horizon IShares Asia is expected to generate 2.79 times less return on investment than Koninklijke Vopak. But when comparing it to its historical volatility, iShares Asia Pacific is 1.79 times less risky than Koninklijke Vopak. It trades about 0.15 of its potential returns per unit of risk. Koninklijke Vopak NV is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4,246 in Koninklijke Vopak NV on August 24, 2024 and sell it today you would earn a total of 324.00 from holding Koninklijke Vopak NV or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Asia Pacific vs. Koninklijke Vopak NV
Performance |
| Timeline |
| iShares Asia Pacific |
| Koninklijke Vopak |
IShares Asia and Koninklijke Vopak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Asia and Koninklijke Vopak
The main advantage of trading using opposite IShares Asia and Koninklijke Vopak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Asia position performs unexpectedly, Koninklijke Vopak 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 Koninklijke Vopak will offset losses from the drop in Koninklijke Vopak's long position.| IShares Asia vs. iShares III Public | IShares Asia vs. iShares Core MSCI | IShares Asia vs. iShares France Govt | IShares Asia vs. iShares Edge MSCI |
| Koninklijke Vopak vs. Aalberts Industries NV | Koninklijke Vopak vs. SBM Offshore NV | Koninklijke Vopak vs. NN Group NV | Koninklijke Vopak vs. Randstad NV |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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