Correlation Between IShares Emerging and IShares Swiss
Can any of the company-specific risk be diversified away by investing in both IShares Emerging and IShares Swiss 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 Emerging and IShares Swiss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Emerging Asia and iShares Swiss Dividend, you can compare the effects of market volatilities on IShares Emerging and IShares Swiss 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 Emerging with a short position of IShares Swiss. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Emerging and IShares Swiss.
Diversification Opportunities for IShares Emerging and IShares Swiss
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding iShares Emerging Asia and iShares Swiss Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Swiss Dividend and IShares Emerging 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 Emerging Asia are associated (or correlated) with IShares Swiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Swiss Dividend has no effect on the direction of IShares Emerging i.e., IShares Emerging and IShares Swiss go up and down completely randomly.
Pair Corralation between IShares Emerging and IShares Swiss
Assuming the 90 days trading horizon IShares Emerging is expected to generate 3.6 times less return on investment than IShares Swiss. But when comparing it to its historical volatility, iShares Emerging Asia is 1.11 times less risky than IShares Swiss. It trades about 0.02 of its potential returns per unit of risk. iShares Swiss Dividend is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 14,401 in iShares Swiss Dividend on September 3, 2024 and sell it today you would earn a total of 1,761 from holding iShares Swiss Dividend or generate 12.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
iShares Emerging Asia vs. iShares Swiss Dividend
Performance |
| Timeline |
| iShares Emerging Asia |
| iShares Swiss Dividend |
IShares Emerging and IShares Swiss Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Emerging and IShares Swiss
The main advantage of trading using opposite IShares Emerging and IShares Swiss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Emerging position performs unexpectedly, IShares Swiss 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 Swiss will offset losses from the drop in IShares Swiss' long position.| IShares Emerging vs. UBSFund Solutions MSCI | IShares Emerging vs. Vanguard SP 500 | IShares Emerging vs. iShares VII PLC | IShares Emerging vs. iShares Core SP |
| IShares Swiss vs. iShares Corp Bond | IShares Swiss vs. iShares Emerging Asia | IShares Swiss vs. iShares MSCI Global | IShares Swiss 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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