Correlation Between IShares SPTSX and IShares China
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX and IShares China 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 SPTSX and IShares China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SPTSX 60 and iShares China, you can compare the effects of market volatilities on IShares SPTSX and IShares China 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 SPTSX with a short position of IShares China. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and IShares China.
Diversification Opportunities for IShares SPTSX and IShares China
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX 60 and iShares China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China and IShares SPTSX 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 SPTSX 60 are associated (or correlated) with IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and IShares China go up and down completely randomly.
Pair Corralation between IShares SPTSX and IShares China
Assuming the 90 days trading horizon iShares SPTSX 60 is expected to under-perform the IShares China. But the etf apears to be less risky and, when comparing its historical volatility, iShares SPTSX 60 is 2.04 times less risky than IShares China. The etf trades about -0.13 of its potential returns per unit of risk. The iShares China is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,588 in iShares China on February 2, 2024 and sell it today you would earn a total of 93.00 from holding iShares China or generate 5.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
iShares SPTSX 60 vs. iShares China
Performance |
Timeline |
iShares SPTSX 60 |
iShares China |
IShares SPTSX and IShares China Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares SPTSX and IShares China
The main advantage of trading using opposite IShares SPTSX and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX position performs unexpectedly, IShares China 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 China will offset losses from the drop in IShares China's long position.IShares SPTSX vs. iShares Core SP | IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares SPTSX Capped |
IShares China vs. BMO MSCI India | IShares China vs. BMO MSCI Emerging | IShares China vs. BMO NASDAQ 100 | IShares China vs. BMO Equal Weight |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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