Correlation Between IShares China and Exchange Traded

Can any of the company-specific risk be diversified away by investing in both IShares China and Exchange Traded 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 Exchange Traded into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares China Large Cap and Exchange Traded Concepts, you can compare the effects of market volatilities on IShares China and Exchange Traded 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 Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and Exchange Traded.

Diversification Opportunities for IShares China and Exchange Traded

0.4

Correlation Coefficient

IShares China  Exchange Traded

Very weak diversification

The 3 months correlation between IShares and Exchange is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding iShares China Large Cap and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts 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 Large Cap are associated (or correlated) with Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of IShares China i.e., IShares China and Exchange Traded go up and down completely randomly.

Pair Corralation between IShares China and Exchange Traded

If you would invest  2,561  in iShares China Large Cap on September 26, 2024 and sell it today you would earn a total of  548.00  from holding iShares China Large Cap or generate 21.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.8%
Values	Daily Returns

iShares China Large Cap  vs.  Exchange Traded Concepts

iShares China Large

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days iShares China Large Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IShares China is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Exchange Traded Concepts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Traded Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Exchange Traded is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares China and Exchange Traded

The main advantage of trading using opposite IShares China and Exchange Traded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, Exchange Traded 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 Exchange Traded will offset losses from the drop in Exchange Traded's long position.

The idea behind iShares China Large Cap and Exchange Traded Concepts pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.