Correlation Between IShares Corp and IShares China
Can any of the company-specific risk be diversified away by investing in both IShares Corp and IShares China 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 Corp and IShares China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Corp Bond and iShares China Large, you can compare the effects of market volatilities on IShares Corp and IShares China 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 Corp with a short position of IShares China. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Corp and IShares China.
Diversification Opportunities for IShares Corp and IShares China
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares Corp Bond and iShares China Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China Large and IShares Corp 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 Corp Bond are associated (or correlated) with IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China Large has no effect on the direction of IShares Corp i.e., IShares Corp and IShares China go up and down completely randomly.
Pair Corralation between IShares Corp and IShares China
Assuming the 90 days trading horizon iShares Corp Bond is expected to generate 0.05 times more return on investment than IShares China. However, iShares Corp Bond is 20.98 times less risky than IShares China. It trades about 0.62 of its potential returns per unit of risk. iShares China Large is currently generating about -0.13 per unit of risk. If you would invest 484.00 in iShares Corp Bond on September 4, 2024 and sell it today you would earn a total of 6.00 from holding iShares Corp Bond or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares Corp Bond vs. iShares China Large
Performance |
| Timeline |
| iShares Corp Bond |
| iShares China Large |
IShares Corp and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Corp and IShares China
The main advantage of trading using opposite IShares Corp and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Corp position performs unexpectedly, IShares China 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 China will offset losses from the drop in IShares China's long position.| IShares Corp vs. UBSFund Solutions MSCI | IShares Corp vs. Vanguard SP 500 | IShares Corp vs. iShares VII PLC | IShares Corp vs. iShares Core SP |
| IShares China vs. iShares Corp Bond | IShares China vs. iShares Emerging Asia | IShares China vs. iShares MSCI Global | IShares China vs. iShares VII PLC |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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