Correlation Between IShares Core and BetaShares Geared
Can any of the company-specific risk be diversified away by investing in both IShares Core and BetaShares Geared 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 Core and BetaShares Geared into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and BetaShares Geared Equity, you can compare the effects of market volatilities on IShares Core and BetaShares Geared 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 Core with a short position of BetaShares Geared. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and BetaShares Geared.
Diversification Opportunities for IShares Core and BetaShares Geared
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and BetaShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and BetaShares Geared Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Geared Equity and IShares Core 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 Core SP are associated (or correlated) with BetaShares Geared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Geared Equity has no effect on the direction of IShares Core i.e., IShares Core and BetaShares Geared go up and down completely randomly.
Pair Corralation between IShares Core and BetaShares Geared
Assuming the 90 days trading horizon IShares Core is expected to generate 2.3 times less return on investment than BetaShares Geared. But when comparing it to its historical volatility, iShares Core SP is 1.55 times less risky than BetaShares Geared. It trades about 0.07 of its potential returns per unit of risk. BetaShares Geared Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,039 in BetaShares Geared Equity on August 25, 2024 and sell it today you would earn a total of 1,502 from holding BetaShares Geared Equity or generate 49.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. BetaShares Geared Equity
Performance |
| Timeline |
| iShares Core SP |
| BetaShares Geared Equity |
IShares Core and BetaShares Geared Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and BetaShares Geared
The main advantage of trading using opposite IShares Core and BetaShares Geared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, BetaShares Geared 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 BetaShares Geared will offset losses from the drop in BetaShares Geared's long position.| IShares Core vs. iShares MSCI Emerging | IShares Core vs. iShares Global Aggregate | IShares Core vs. iShares CoreSP MidCap | IShares Core vs. iShares SP 500 |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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