Correlation Between IShares International and IShares Emerging
Can any of the company-specific risk be diversified away by investing in both IShares International and IShares Emerging 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 International and IShares Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares International Developed and iShares Emerging Markets, you can compare the effects of market volatilities on IShares International and IShares Emerging 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 International with a short position of IShares Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and IShares Emerging.
Diversification Opportunities for IShares International and IShares Emerging
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Develope and iShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Emerging Markets and IShares International 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 International Developed are associated (or correlated) with IShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Emerging Markets has no effect on the direction of IShares International i.e., IShares International and IShares Emerging go up and down completely randomly.
Pair Corralation between IShares International and IShares Emerging
Given the investment horizon of 90 days IShares International is expected to generate 2.43 times less return on investment than IShares Emerging. But when comparing it to its historical volatility, iShares International Developed is 1.05 times less risky than IShares Emerging. It trades about 0.01 of its potential returns per unit of risk. iShares Emerging Markets is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,996 in iShares Emerging Markets on September 3, 2024 and sell it today you would earn a total of 128.00 from holding iShares Emerging Markets or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares International Develope vs. iShares Emerging Markets
Performance |
| Timeline |
| iShares International |
| iShares Emerging Markets |
IShares International and IShares Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and IShares Emerging
The main advantage of trading using opposite IShares International and IShares Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International position performs unexpectedly, IShares Emerging 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 Emerging will offset losses from the drop in IShares Emerging's long position.| IShares International vs. iShares International Treasury | IShares International vs. iShares 1 3 Year | IShares International vs. SPDR Dow Jones | IShares International vs. iShares MSCI Emerging |
| IShares Emerging vs. iShares Global Infrastructure | IShares Emerging vs. iShares MSCI Emerging | IShares Emerging vs. iShares MSCI New | IShares Emerging vs. iShares International Developed |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |