Correlation Between IShares Global and Air New
Can any of the company-specific risk be diversified away by investing in both IShares Global and Air New 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 Air New 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 Air New Zealand, you can compare the effects of market volatilities on IShares Global and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Air New.
Diversification Opportunities for IShares Global and Air New
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and Air is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of IShares Global i.e., IShares Global and Air New go up and down completely randomly.
Pair Corralation between IShares Global and Air New
Assuming the 90 days trading horizon iShares Global Healthcare is expected to generate 0.53 times more return on investment than Air New. However, iShares Global Healthcare is 1.89 times less risky than Air New. It trades about 0.04 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.02 per unit of risk. If you would invest 12,299 in iShares Global Healthcare on September 14, 2024 and sell it today you would earn a total of 1,605 from holding iShares Global Healthcare or generate 13.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Healthcare vs. Air New Zealand
Performance |
| Timeline |
| iShares Global Healthcare |
| Air New Zealand |
IShares Global and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and Air New
The main advantage of trading using opposite IShares Global and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New'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 |
| Air New vs. Ecofibre | Air New vs. iShares Global Healthcare | Air New vs. Adriatic Metals Plc | Air New vs. Australian Dairy Farms |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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