Correlation Between IShares Global and BetaShares Australia
Can any of the company-specific risk be diversified away by investing in both IShares Global and BetaShares Australia 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 Global and BetaShares Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Healthcare and BetaShares Australia 200, you can compare the effects of market volatilities on IShares Global and BetaShares Australia 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 Global with a short position of BetaShares Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and BetaShares Australia.
Diversification Opportunities for IShares Global and BetaShares Australia
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and BetaShares is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and BetaShares Australia 200 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Australia 200 and IShares Global 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 Global Healthcare are associated (or correlated) with BetaShares Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Australia 200 has no effect on the direction of IShares Global i.e., IShares Global and BetaShares Australia go up and down completely randomly.
Pair Corralation between IShares Global and BetaShares Australia
Assuming the 90 days trading horizon IShares Global is expected to generate 2.44 times less return on investment than BetaShares Australia. But when comparing it to its historical volatility, iShares Global Healthcare is 1.03 times less risky than BetaShares Australia. It trades about 0.04 of its potential returns per unit of risk. BetaShares Australia 200 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 11,316 in BetaShares Australia 200 on September 12, 2024 and sell it today you would earn a total of 2,757 from holding BetaShares Australia 200 or generate 24.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Healthcare vs. BetaShares Australia 200
Performance |
| Timeline |
| iShares Global Healthcare |
| BetaShares Australia 200 |
IShares Global and BetaShares Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and BetaShares Australia
The main advantage of trading using opposite IShares Global and BetaShares Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, BetaShares Australia 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 Australia will offset losses from the drop in BetaShares Australia's long position.| IShares Global vs. iShares MSCI Emerging | IShares Global vs. iShares Global Aggregate | IShares Global vs. iShares CoreSP MidCap | IShares Global 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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