Correlation Between IShares China and IShares Core
Can any of the company-specific risk be diversified away by investing in both IShares China and IShares Core 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 IShares Core 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 iShares Core Cash, you can compare the effects of market volatilities on IShares China and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and IShares Core.
Diversification Opportunities for IShares China and IShares Core
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares China LargeCap and iShares Core Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Cash 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Cash has no effect on the direction of IShares China i.e., IShares China and IShares Core go up and down completely randomly.
Pair Corralation between IShares China and IShares Core
Assuming the 90 days trading horizon IShares China is expected to generate 1.51 times less return on investment than IShares Core. But when comparing it to its historical volatility, iShares China LargeCap is 4.25 times less risky than IShares Core. It trades about 0.09 of its potential returns per unit of risk. iShares Core Cash is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,741 in iShares Core Cash on September 1, 2024 and sell it today you would earn a total of 326.00 from holding iShares Core Cash or generate 3.35% 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. iShares Core Cash
Performance |
| Timeline |
| iShares China LargeCap |
| iShares Core Cash |
IShares China and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and IShares Core
The main advantage of trading using opposite IShares China and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core'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 |
| IShares Core vs. iShares MSCI Emerging | IShares Core vs. iShares Global Aggregate | IShares Core vs. iShares CoreSP MidCap | IShares Core 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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