Correlation Between NYSE Composite and IShares AsiaPacific
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and IShares AsiaPacific 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 NYSE Composite and IShares AsiaPacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and iShares AsiaPacific Dividend, you can compare the effects of market volatilities on NYSE Composite and IShares AsiaPacific 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 NYSE Composite with a short position of IShares AsiaPacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and IShares AsiaPacific.
Diversification Opportunities for NYSE Composite and IShares AsiaPacific
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and IShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and iShares AsiaPacific Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares AsiaPacific and NYSE Composite 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 NYSE Composite are associated (or correlated) with IShares AsiaPacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares AsiaPacific has no effect on the direction of NYSE Composite i.e., NYSE Composite and IShares AsiaPacific go up and down completely randomly.
Pair Corralation between NYSE Composite and IShares AsiaPacific
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.84 times more return on investment than IShares AsiaPacific. However, NYSE Composite is 1.19 times less risky than IShares AsiaPacific. It trades about 0.08 of its potential returns per unit of risk. iShares AsiaPacific Dividend is currently generating about 0.06 per unit of risk. If you would invest 1,531,179 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 490,857 from holding NYSE Composite or generate 32.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. iShares AsiaPacific Dividend
Performance |
| Timeline |
NYSE Composite and IShares AsiaPacific Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
iShares AsiaPacific Dividend
Pair trading matchups for IShares AsiaPacific
Pair Trading with NYSE Composite and IShares AsiaPacific
The main advantage of trading using opposite NYSE Composite and IShares AsiaPacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, IShares AsiaPacific 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 IShares AsiaPacific will offset losses from the drop in IShares AsiaPacific's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| IShares AsiaPacific vs. Matthews China Active | IShares AsiaPacific vs. MAYBANK EMERGING ETF | IShares AsiaPacific vs. Matthews Emerging Markets | IShares AsiaPacific vs. JP Morgan Exchange Traded |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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