Correlation Between IShares China and IShares India
Can any of the company-specific risk be diversified away by investing in both IShares China and IShares India 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 IShares India into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares China and iShares India Index, you can compare the effects of market volatilities on IShares China and IShares India 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 IShares India. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and IShares India.
Diversification Opportunities for IShares China and IShares India
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding iShares China and iShares India Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares India Index 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 are associated (or correlated) with IShares India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares India Index has no effect on the direction of IShares China i.e., IShares China and IShares India go up and down completely randomly.
Pair Corralation between IShares China and IShares India
Assuming the 90 days trading horizon iShares China is expected to under-perform the IShares India. In addition to that, IShares China is 2.14 times more volatile than iShares India Index. It trades about -0.17 of its total potential returns per unit of risk. iShares India Index is currently generating about 0.02 per unit of volatility. If you would invest 5,663 in iShares India Index on August 29, 2024 and sell it today you would earn a total of 19.00 from holding iShares India Index or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares China vs. iShares India Index
Performance |
| Timeline |
| iShares China |
| iShares India Index |
IShares China and IShares India Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and IShares India
The main advantage of trading using opposite IShares China and IShares India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, IShares India 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 India will offset losses from the drop in IShares India's long position.| IShares China vs. BMO MSCI India | IShares China vs. BMO MSCI Emerging | IShares China vs. BMO NASDAQ 100 | IShares China vs. BMO Equal Weight |
| IShares India vs. iShares China | IShares India vs. iShares MSCI Emerging | IShares India vs. iShares IG Corporate | IShares India vs. iShares Global Real |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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