Correlation Between IShares China and BetaShares Global
Can any of the company-specific risk be diversified away by investing in both IShares China and BetaShares Global 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 Global 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 Global Government, you can compare the effects of market volatilities on IShares China and BetaShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and BetaShares Global.
Diversification Opportunities for IShares China and BetaShares Global
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and BetaShares is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares China LargeCap and BetaShares Global Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Global 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Global has no effect on the direction of IShares China i.e., IShares China and BetaShares Global go up and down completely randomly.
Pair Corralation between IShares China and BetaShares Global
Assuming the 90 days trading horizon iShares China LargeCap is expected to under-perform the BetaShares Global. In addition to that, IShares China is 1.4 times more volatile than BetaShares Global Government. It trades about -0.22 of its total potential returns per unit of risk. BetaShares Global Government is currently generating about 0.04 per unit of volatility. If you would invest 1,374 in BetaShares Global Government on August 29, 2024 and sell it today you would earn a total of 10.00 from holding BetaShares Global Government or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares China LargeCap vs. BetaShares Global Government
Performance |
| Timeline |
| iShares China LargeCap |
| BetaShares Global |
IShares China and BetaShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and BetaShares Global
The main advantage of trading using opposite IShares China and BetaShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, BetaShares Global 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 Global will offset losses from the drop in BetaShares Global's long position.| IShares China vs. iShares MSCI Emerging | IShares China vs. iShares Global Aggregate | IShares China vs. iShares CoreSP MidCap | IShares China 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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