Correlation Between IShares Europe and SmartETFs Asia
Can any of the company-specific risk be diversified away by investing in both IShares Europe and SmartETFs Asia 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 Europe and SmartETFs Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Europe ETF and SmartETFs Asia Pacific, you can compare the effects of market volatilities on IShares Europe and SmartETFs Asia 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 Europe with a short position of SmartETFs Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Europe and SmartETFs Asia.
Diversification Opportunities for IShares Europe and SmartETFs Asia
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and SmartETFs is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding iShares Europe ETF and SmartETFs Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartETFs Asia Pacific and IShares Europe 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 Europe ETF are associated (or correlated) with SmartETFs Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartETFs Asia Pacific has no effect on the direction of IShares Europe i.e., IShares Europe and SmartETFs Asia go up and down completely randomly.
Pair Corralation between IShares Europe and SmartETFs Asia
Considering the 90-day investment horizon iShares Europe ETF is expected to generate 0.72 times more return on investment than SmartETFs Asia. However, iShares Europe ETF is 1.39 times less risky than SmartETFs Asia. It trades about 0.24 of its potential returns per unit of risk. SmartETFs Asia Pacific is currently generating about 0.09 per unit of risk. If you would invest 5,211 in iShares Europe ETF on October 20, 2024 and sell it today you would earn a total of 142.00 from holding iShares Europe ETF or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Europe ETF vs. SmartETFs Asia Pacific
Performance |
| Timeline |
| iShares Europe ETF |
| SmartETFs Asia Pacific |
IShares Europe and SmartETFs Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Europe and SmartETFs Asia
The main advantage of trading using opposite IShares Europe and SmartETFs Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Europe position performs unexpectedly, SmartETFs Asia 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 SmartETFs Asia will offset losses from the drop in SmartETFs Asia's long position.| IShares Europe vs. iShares MSCI Eurozone | IShares Europe vs. iShares MSCI Pacific | IShares Europe vs. iShares Latin America | IShares Europe vs. iShares MSCI France |
| SmartETFs Asia vs. Matthews China Active | SmartETFs Asia vs. MAYBANK EMERGING ETF | SmartETFs Asia vs. Matthews Emerging Markets | SmartETFs Asia vs. JP Morgan Exchange Traded |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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