Correlation Between IShares Core and Bunge
Can any of the company-specific risk be diversified away by investing in both IShares Core and Bunge 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 Core and Bunge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and Bunge Limited, you can compare the effects of market volatilities on IShares Core and Bunge 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 Core with a short position of Bunge. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Bunge.
Diversification Opportunities for IShares Core and Bunge
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Bunge is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Bunge Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge Limited and IShares Core 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 Core MSCI are associated (or correlated) with Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge Limited has no effect on the direction of IShares Core i.e., IShares Core and Bunge go up and down completely randomly.
Pair Corralation between IShares Core and Bunge
Given the investment horizon of 90 days iShares Core MSCI is expected to under-perform the Bunge. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core MSCI is 1.6 times less risky than Bunge. The etf trades about -0.16 of its potential returns per unit of risk. The Bunge Limited is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 9,741 in Bunge Limited on January 20, 2024 and sell it today you would earn a total of 910.00 from holding Bunge Limited or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Core MSCI vs. Bunge Limited
Performance |
| Timeline |
| iShares Core MSCI |
| Bunge Limited |
IShares Core and Bunge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Bunge
The main advantage of trading using opposite IShares Core and Bunge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Bunge 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 Bunge will offset losses from the drop in Bunge's long position.| IShares Core vs. Freedom Day Dividend | IShares Core vs. iShares MSCI China | IShares Core vs. iShares Dividend and | IShares Core vs. SmartETFs Dividend Builder |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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