Correlation Between IShares China and BetaShares Climate
Can any of the company-specific risk be diversified away by investing in both IShares China and BetaShares Climate 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 BetaShares Climate 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 BetaShares Climate Change, you can compare the effects of market volatilities on IShares China and BetaShares Climate 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 BetaShares Climate. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and BetaShares Climate.
Diversification Opportunities for IShares China and BetaShares Climate
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and BetaShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares China LargeCap and BetaShares Climate Change in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Climate Change 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 BetaShares Climate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Climate Change has no effect on the direction of IShares China i.e., IShares China and BetaShares Climate go up and down completely randomly.
Pair Corralation between IShares China and BetaShares Climate
Assuming the 90 days trading horizon iShares China LargeCap is expected to generate 1.61 times more return on investment than BetaShares Climate. However, IShares China is 1.61 times more volatile than BetaShares Climate Change. It trades about 0.07 of its potential returns per unit of risk. BetaShares Climate Change is currently generating about 0.0 per unit of risk. If you would invest 4,051 in iShares China LargeCap on September 1, 2024 and sell it today you would earn a total of 579.00 from holding iShares China LargeCap or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.23% |
| Values | Daily Returns |
iShares China LargeCap vs. BetaShares Climate Change
Performance |
| Timeline |
| iShares China LargeCap |
| BetaShares Climate Change |
IShares China and BetaShares Climate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and BetaShares Climate
The main advantage of trading using opposite IShares China and BetaShares Climate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, BetaShares Climate 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 Climate will offset losses from the drop in BetaShares Climate'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 |
| BetaShares Climate vs. Champion Iron | BetaShares Climate vs. Australian Dairy Farms | BetaShares Climate vs. Perpetual Credit Income | BetaShares Climate vs. Greentech Metals |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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