Correlation Between IShares Asia and IShares VII
Can any of the company-specific risk be diversified away by investing in both IShares Asia and IShares VII 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 IShares VII into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Asia Property and iShares VII PLC, you can compare the effects of market volatilities on IShares Asia and IShares VII 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 IShares VII. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Asia and IShares VII.
Diversification Opportunities for IShares Asia and IShares VII
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia Property and iShares VII PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares VII PLC 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 Property are associated (or correlated) with IShares VII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares VII PLC has no effect on the direction of IShares Asia i.e., IShares Asia and IShares VII go up and down completely randomly.
Pair Corralation between IShares Asia and IShares VII
Assuming the 90 days trading horizon iShares Asia Property is expected to under-perform the IShares VII. In addition to that, IShares Asia is 1.38 times more volatile than iShares VII PLC. It trades about -0.12 of its total potential returns per unit of risk. iShares VII PLC is currently generating about 0.1 per unit of volatility. If you would invest 3,952,500 in iShares VII PLC on October 9, 2024 and sell it today you would earn a total of 47,000 from holding iShares VII PLC or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Asia Property vs. iShares VII PLC
Performance |
| Timeline |
| iShares Asia Property |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| iShares VII PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
IShares Asia and IShares VII Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Asia and IShares VII
The main advantage of trading using opposite IShares Asia and IShares VII positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Asia position performs unexpectedly, IShares VII 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 VII will offset losses from the drop in IShares VII's long position.The idea behind iShares Asia Property and iShares VII PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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