Correlation Between IShares Latin and SmartETFs Asia
Can any of the company-specific risk be diversified away by investing in both IShares Latin 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 Latin 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 Latin America and SmartETFs Asia Pacific, you can compare the effects of market volatilities on IShares Latin 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 Latin with a short position of SmartETFs Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Latin and SmartETFs Asia.
Diversification Opportunities for IShares Latin and SmartETFs Asia
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and SmartETFs is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares Latin America 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 Latin 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 Latin America 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 Latin i.e., IShares Latin and SmartETFs Asia go up and down completely randomly.
Pair Corralation between IShares Latin and SmartETFs Asia
Considering the 90-day investment horizon iShares Latin America is expected to under-perform the SmartETFs Asia. In addition to that, IShares Latin is 1.89 times more volatile than SmartETFs Asia Pacific. It trades about -0.09 of its total potential returns per unit of risk. SmartETFs Asia Pacific is currently generating about 0.06 per unit of volatility. If you would invest 1,554 in SmartETFs Asia Pacific on December 2, 2024 and sell it today you would earn a total of 13.00 from holding SmartETFs Asia Pacific or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Latin America vs. SmartETFs Asia Pacific
Performance |
| Timeline |
| iShares Latin America |
| SmartETFs Asia Pacific |
IShares Latin and SmartETFs Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Latin and SmartETFs Asia
The main advantage of trading using opposite IShares Latin and SmartETFs Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Latin 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 Latin vs. iShares MSCI Mexico | IShares Latin vs. iShares MSCI Pacific | IShares Latin vs. iShares MSCI South | IShares Latin vs. iShares MSCI Brazil |
| SmartETFs Asia vs. SmartETFs Dividend Builder | SmartETFs Asia vs. Anfield Dynamic Fixed | SmartETFs Asia vs. Anfield Universal Fixed | SmartETFs Asia vs. Aptus Drawdown Managed |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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