Correlation Between IShares UBS and IShares China
Can any of the company-specific risk be diversified away by investing in both IShares UBS 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 UBS 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 UBS Government and iShares China LargeCap, you can compare the effects of market volatilities on IShares UBS 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 UBS with a short position of IShares China. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares UBS and IShares China.
Diversification Opportunities for IShares UBS and IShares China
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and IShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares UBS Government and iShares China LargeCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China LargeCap and IShares UBS 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 UBS Government 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 LargeCap has no effect on the direction of IShares UBS i.e., IShares UBS and IShares China go up and down completely randomly.
Pair Corralation between IShares UBS and IShares China
Assuming the 90 days trading horizon iShares UBS Government is expected to generate 0.27 times more return on investment than IShares China. However, iShares UBS Government is 3.72 times less risky than IShares China. It trades about 0.14 of its potential returns per unit of risk. iShares China LargeCap is currently generating about -0.22 per unit of risk. If you would invest 12,360 in iShares UBS Government on August 29, 2024 and sell it today you would earn a total of 116.00 from holding iShares UBS Government or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares UBS Government vs. iShares China LargeCap
Performance |
| Timeline |
| iShares UBS Government |
| iShares China LargeCap |
IShares UBS and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares UBS and IShares China
The main advantage of trading using opposite IShares UBS and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares UBS 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 UBS vs. iShares MSCI Emerging | IShares UBS vs. iShares Global Aggregate | IShares UBS vs. iShares CoreSP MidCap | IShares UBS vs. iShares SP 500 |
| IShares China vs. iShares MSCI Emerging | IShares China vs. iShares Global Aggregate | IShares China vs. iShares CoreSP MidCap | IShares China 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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