Correlation Between IShares Global and IShares India
Can any of the company-specific risk be diversified away by investing in both IShares Global 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 Global 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 Global Healthcare and iShares India Index, you can compare the effects of market volatilities on IShares Global 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 Global with a short position of IShares India. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and IShares India.
Diversification Opportunities for IShares Global and IShares India
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare 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 Global 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 Global Healthcare 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 Global i.e., IShares Global and IShares India go up and down completely randomly.
Pair Corralation between IShares Global and IShares India
Assuming the 90 days trading horizon iShares Global Healthcare is expected to under-perform the IShares India. But the etf apears to be less risky and, when comparing its historical volatility, iShares Global Healthcare is 1.36 times less risky than IShares India. The etf trades about -0.01 of its potential returns per unit of risk. The iShares India Index is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 5,510 in iShares India Index on September 16, 2024 and sell it today you would earn a total of 290.00 from holding iShares India Index or generate 5.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Global Healthcare vs. iShares India Index
Performance |
Timeline |
iShares Global Healthcare |
iShares India Index |
IShares Global and IShares India Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Global and IShares India
The main advantage of trading using opposite IShares Global and IShares India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global 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 Global vs. iShares SPTSX Capped | IShares Global vs. iShares SPTSX Capped | IShares Global vs. iShares Global Real | IShares Global vs. iShares Global Infrastructure |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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