Correlation Between IShares China and Airlie Australian
Can any of the company-specific risk be diversified away by investing in both IShares China and Airlie Australian 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 China and Airlie Australian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares China LargeCap and Airlie Australian Share, you can compare the effects of market volatilities on IShares China and Airlie Australian 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 China with a short position of Airlie Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and Airlie Australian.
Diversification Opportunities for IShares China and Airlie Australian
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Airlie is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares China LargeCap and Airlie Australian Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airlie Australian Share and IShares China 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 China LargeCap are associated (or correlated) with Airlie Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airlie Australian Share has no effect on the direction of IShares China i.e., IShares China and Airlie Australian go up and down completely randomly.
Pair Corralation between IShares China and Airlie Australian
Assuming the 90 days trading horizon iShares China LargeCap is expected to generate 2.19 times more return on investment than Airlie Australian. However, IShares China is 2.19 times more volatile than Airlie Australian Share. It trades about 0.09 of its potential returns per unit of risk. Airlie Australian Share is currently generating about 0.05 per unit of risk. If you would invest 3,568 in iShares China LargeCap on September 1, 2024 and sell it today you would earn a total of 1,062 from holding iShares China LargeCap or generate 29.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares China LargeCap vs. Airlie Australian Share
Performance |
| Timeline |
| iShares China LargeCap |
| Airlie Australian Share |
IShares China and Airlie Australian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and Airlie Australian
The main advantage of trading using opposite IShares China and Airlie Australian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, Airlie Australian 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 Airlie Australian will offset losses from the drop in Airlie Australian's long position.| IShares China vs. ETFS Morningstar Global | IShares China vs. BetaShares Geared Equity | IShares China vs. VanEck Vectors Australian | IShares China vs. SPDR SPASX 200 |
| Airlie Australian vs. iShares MSCI Emerging | Airlie Australian vs. Global X Hydrogen | Airlie Australian vs. Janus Henderson Sustainable | Airlie Australian 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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