Correlation Between Alibaba Group and IShares Asia
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and IShares Asia 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 Alibaba Group and IShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and iShares Asia Trust, you can compare the effects of market volatilities on Alibaba Group and IShares Asia 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 Alibaba Group with a short position of IShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and IShares Asia.
Diversification Opportunities for Alibaba Group and IShares Asia
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alibaba and IShares is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and iShares Asia Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia Trust and Alibaba Group 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 Alibaba Group Holding are associated (or correlated) with IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia Trust has no effect on the direction of Alibaba Group i.e., Alibaba Group and IShares Asia go up and down completely randomly.
Pair Corralation between Alibaba Group and IShares Asia
Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the IShares Asia. In addition to that, Alibaba Group is 9.9 times more volatile than iShares Asia Trust. It trades about -0.12 of its total potential returns per unit of risk. iShares Asia Trust is currently generating about 0.22 per unit of volatility. If you would invest 151.00 in iShares Asia Trust on January 17, 2024 and sell it today you would earn a total of 1.00 from holding iShares Asia Trust or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Alibaba Group Holding vs. iShares Asia Trust
Performance |
| Timeline |
| Alibaba Group Holding |
| iShares Asia Trust |
Alibaba Group and IShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and IShares Asia
The main advantage of trading using opposite Alibaba Group and IShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, IShares Asia 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 Asia will offset losses from the drop in IShares Asia's long position.| Alibaba Group vs. Appian Corp | Alibaba Group vs. Okta Inc | Alibaba Group vs. MongoDB | Alibaba Group vs. Twilio Inc |
| IShares Asia vs. Vanguard Total Stock | IShares Asia vs. SPDR SP 500 | IShares Asia vs. iShares Core SP | IShares Asia vs. Vanguard Total Bond |
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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