Correlation Between IShares Asia and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both IShares Asia and NYSE Composite 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 Asia and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Asia Property and NYSE Composite, you can compare the effects of market volatilities on IShares Asia and NYSE Composite 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 Asia with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Asia and NYSE Composite.
Diversification Opportunities for IShares Asia and NYSE Composite
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and NYSE is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia Property and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and IShares Asia 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 Asia Property are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of IShares Asia i.e., IShares Asia and NYSE Composite go up and down completely randomly.
Pair Corralation between IShares Asia and NYSE Composite
Assuming the 90 days trading horizon iShares Asia Property is expected to generate 1.26 times more return on investment than NYSE Composite. However, IShares Asia is 1.26 times more volatile than NYSE Composite. It trades about 0.01 of its potential returns per unit of risk. NYSE Composite is currently generating about -0.06 per unit of risk. If you would invest 2,053 in iShares Asia Property on February 4, 2024 and sell it today you would earn a total of 2.00 from holding iShares Asia Property or generate 0.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
iShares Asia Property vs. NYSE Composite
Performance |
Timeline |
IShares Asia and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
iShares Asia Property
Pair trading matchups for IShares Asia
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with IShares Asia and NYSE Composite
The main advantage of trading using opposite IShares Asia and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Asia position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.IShares Asia vs. iShares Corp Bond | IShares Asia vs. iShares Emerging Asia | IShares Asia vs. iShares Corp Bond | IShares Asia vs. iShares MSCI Global |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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