Correlation Between IShares China and Betashares Wealth
Can any of the company-specific risk be diversified away by investing in both IShares China and Betashares Wealth 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 Wealth 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 Wealth Builder, you can compare the effects of market volatilities on IShares China and Betashares Wealth 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 Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and Betashares Wealth.
Diversification Opportunities for IShares China and Betashares Wealth
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Betashares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding iShares China LargeCap and Betashares Wealth Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Wealth Builder 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 Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Wealth Builder has no effect on the direction of IShares China i.e., IShares China and Betashares Wealth go up and down completely randomly.
Pair Corralation between IShares China and Betashares Wealth
Assuming the 90 days trading horizon iShares China LargeCap is expected to under-perform the Betashares Wealth. In addition to that, IShares China is 1.39 times more volatile than Betashares Wealth Builder. It trades about -0.2 of its total potential returns per unit of risk. Betashares Wealth Builder is currently generating about 0.37 per unit of volatility. If you would invest 2,795 in Betashares Wealth Builder on September 2, 2024 and sell it today you would earn a total of 173.00 from holding Betashares Wealth Builder or generate 6.19% 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. Betashares Wealth Builder
Performance |
| Timeline |
| iShares China LargeCap |
| Betashares Wealth Builder |
IShares China and Betashares Wealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and Betashares Wealth
The main advantage of trading using opposite IShares China and Betashares Wealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, Betashares Wealth 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 Wealth will offset losses from the drop in Betashares Wealth'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 Wealth vs. Betashares Australian Major | Betashares Wealth vs. Betashares Wealth Builder | Betashares Wealth vs. Betashares Australian Cash | Betashares Wealth vs. Betashares Australian Bank |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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