Correlation Between IShares China and ETFS Physical
Can any of the company-specific risk be diversified away by investing in both IShares China and ETFS Physical 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 ETFS Physical 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 ETFS Physical Silver, you can compare the effects of market volatilities on IShares China and ETFS Physical 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 ETFS Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and ETFS Physical.
Diversification Opportunities for IShares China and ETFS Physical
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and ETFS is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares China LargeCap and ETFS Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Physical Silver 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 ETFS Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Physical Silver has no effect on the direction of IShares China i.e., IShares China and ETFS Physical go up and down completely randomly.
Pair Corralation between IShares China and ETFS Physical
Assuming the 90 days trading horizon iShares China LargeCap is expected to generate 0.67 times more return on investment than ETFS Physical. However, iShares China LargeCap is 1.48 times less risky than ETFS Physical. It trades about -0.16 of its potential returns per unit of risk. ETFS Physical Silver is currently generating about -0.3 per unit of risk. If you would invest 4,813 in iShares China LargeCap on September 1, 2024 and sell it today you would lose (183.00) from holding iShares China LargeCap or give up 3.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares China LargeCap vs. ETFS Physical Silver
Performance |
| Timeline |
| iShares China LargeCap |
| ETFS Physical Silver |
IShares China and ETFS Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and ETFS Physical
The main advantage of trading using opposite IShares China and ETFS Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, ETFS Physical 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 ETFS Physical will offset losses from the drop in ETFS Physical'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 |
| ETFS Physical vs. Champion Iron | ETFS Physical vs. Australian Dairy Farms | ETFS Physical vs. Perpetual Credit Income | ETFS Physical 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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