Correlation Between IShares Asia and LG Clean
Can any of the company-specific risk be diversified away by investing in both IShares Asia and LG Clean 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 LG Clean 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 LG Clean Water, you can compare the effects of market volatilities on IShares Asia and LG Clean 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 LG Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Asia and LG Clean.
Diversification Opportunities for IShares Asia and LG Clean
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and GLUG is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia Pacific and LG Clean Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Clean Water 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 LG Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Clean Water has no effect on the direction of IShares Asia i.e., IShares Asia and LG Clean go up and down completely randomly.
Pair Corralation between IShares Asia and LG Clean
Assuming the 90 days trading horizon IShares Asia is expected to generate 1.52 times less return on investment than LG Clean. But when comparing it to its historical volatility, iShares Asia Pacific is 1.04 times less risky than LG Clean. It trades about 0.17 of its potential returns per unit of risk. LG Clean Water is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,585 in LG Clean Water on October 29, 2024 and sell it today you would earn a total of 45.00 from holding LG Clean Water or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
iShares Asia Pacific vs. LG Clean Water
Performance |
| Timeline |
| iShares Asia Pacific |
| LG Clean Water |
IShares Asia and LG Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Asia and LG Clean
The main advantage of trading using opposite IShares Asia and LG Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Asia position performs unexpectedly, LG Clean 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 LG Clean will offset losses from the drop in LG Clean's long position.| IShares Asia vs. iShares Corp Bond | IShares Asia vs. iShares Emerging Asia | IShares Asia vs. iShares MSCI Global | IShares Asia vs. iShares VII PLC |
| LG Clean vs. Vanguard FTSE Emerging | LG Clean vs. UBS ETF MSCI | LG Clean vs. VanEck Solana ETN | LG Clean vs. iShares Corp Bond |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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