Correlation Between IShares Global and Australia
Can any of the company-specific risk be diversified away by investing in both IShares Global and 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 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 Australia and New, you can compare the effects of market volatilities on IShares Global and 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 Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Australia.
Diversification Opportunities for IShares Global and Australia
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Australia is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Australia and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia and New 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 Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia and New has no effect on the direction of IShares Global i.e., IShares Global and Australia go up and down completely randomly.
Pair Corralation between IShares Global and Australia
Assuming the 90 days trading horizon iShares Global Healthcare is expected to generate 2.48 times more return on investment than Australia. However, IShares Global is 2.48 times more volatile than Australia and New. It trades about 0.07 of its potential returns per unit of risk. Australia and New is currently generating about 0.11 per unit of risk. If you would invest 11,649 in iShares Global Healthcare on December 4, 2024 and sell it today you would earn a total of 3,316 from holding iShares Global Healthcare or generate 28.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 47.29% |
| Values | Daily Returns |
iShares Global Healthcare vs. Australia and New
Performance |
| Timeline |
| iShares Global Healthcare |
| Australia and New |
IShares Global and Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and Australia
The main advantage of trading using opposite IShares Global and Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, 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 Australia will offset losses from the drop in 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 |
| Australia vs. Lendlease Group | Australia vs. Spirit Telecom | Australia vs. IRIS Metals | Australia vs. Queste Communications |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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