Correlation Between IShares China and ETFS Morningstar
Can any of the company-specific risk be diversified away by investing in both IShares China and ETFS Morningstar 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 Morningstar 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 Morningstar Global, you can compare the effects of market volatilities on IShares China and ETFS Morningstar 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 Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and ETFS Morningstar.
Diversification Opportunities for IShares China and ETFS Morningstar
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and ETFS is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares China LargeCap and ETFS Morningstar Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Morningstar 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 ETFS Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Morningstar Global has no effect on the direction of IShares China i.e., IShares China and ETFS Morningstar go up and down completely randomly.
Pair Corralation between IShares China and ETFS Morningstar
Assuming the 90 days trading horizon iShares China LargeCap is expected to under-perform the ETFS Morningstar. But the etf apears to be less risky and, when comparing its historical volatility, iShares China LargeCap is 1.24 times less risky than ETFS Morningstar. The etf trades about -0.16 of its potential returns per unit of risk. The ETFS Morningstar Global is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 10,290 in ETFS Morningstar Global on September 1, 2024 and sell it today you would earn a total of 830.00 from holding ETFS Morningstar Global or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares China LargeCap vs. ETFS Morningstar Global
Performance |
| Timeline |
| iShares China LargeCap |
| ETFS Morningstar Global |
IShares China and ETFS Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and ETFS Morningstar
The main advantage of trading using opposite IShares China and ETFS Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, ETFS Morningstar 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 Morningstar will offset losses from the drop in ETFS Morningstar'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 Morningstar vs. ETFS Battery Tech | ETFS Morningstar vs. ETFS Ultra Long | ETFS Morningstar vs. ETFS Ultra Short | ETFS Morningstar vs. ETFS FANG ETF |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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