Correlation Between IShares Core and ISharesGlobal 100
Can any of the company-specific risk be diversified away by investing in both IShares Core and ISharesGlobal 100 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 ISharesGlobal 100 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 iSharesGlobal 100, you can compare the effects of market volatilities on IShares Core and ISharesGlobal 100 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 ISharesGlobal 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and ISharesGlobal 100.
Diversification Opportunities for IShares Core and ISharesGlobal 100
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and ISharesGlobal is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and iSharesGlobal 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSharesGlobal 100 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 ISharesGlobal 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSharesGlobal 100 has no effect on the direction of IShares Core i.e., IShares Core and ISharesGlobal 100 go up and down completely randomly.
Pair Corralation between IShares Core and ISharesGlobal 100
Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.83 times more return on investment than ISharesGlobal 100. However, iShares Core SP is 1.21 times less risky than ISharesGlobal 100. It trades about 0.2 of its potential returns per unit of risk. iSharesGlobal 100 is currently generating about 0.08 per unit of risk. If you would invest 6,325 in iShares Core SP on November 2, 2024 and sell it today you would earn a total of 160.00 from holding iShares Core SP or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. iSharesGlobal 100
Performance |
| Timeline |
| iShares Core SP |
| iSharesGlobal 100 |
IShares Core and ISharesGlobal 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and ISharesGlobal 100
The main advantage of trading using opposite IShares Core and ISharesGlobal 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, ISharesGlobal 100 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 ISharesGlobal 100 will offset losses from the drop in ISharesGlobal 100's long position.| IShares Core vs. Betashares Asia Technology | IShares Core vs. CD Private Equity | IShares Core vs. BetaShares Australia 200 | IShares Core vs. Australian High Interest |
| ISharesGlobal 100 vs. iShares MSCI Emerging | ISharesGlobal 100 vs. Global X Hydrogen | ISharesGlobal 100 vs. Janus Henderson Sustainable | ISharesGlobal 100 vs. JPMorgan Equity Premium |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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