Correlation Between IShares India and IXSE
Can any of the company-specific risk be diversified away by investing in both IShares India and IXSE 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 India and IXSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares India 50 and IXSE, you can compare the effects of market volatilities on IShares India and IXSE 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 India with a short position of IXSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares India and IXSE.
Diversification Opportunities for IShares India and IXSE
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IShares and IXSE is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding iShares India 50 and IXSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IXSE and IShares India 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 India 50 are associated (or correlated) with IXSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IXSE has no effect on the direction of IShares India i.e., IShares India and IXSE go up and down completely randomly.
Pair Corralation between IShares India and IXSE
If you would invest 4,982 in iShares India 50 on January 25, 2024 and sell it today you would earn a total of 57.00 from holding iShares India 50 or generate 1.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
iShares India 50 vs. IXSE
Performance |
Timeline |
iShares India 50 |
IXSE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares India and IXSE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares India and IXSE
The main advantage of trading using opposite IShares India and IXSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares India position performs unexpectedly, IXSE 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 IXSE will offset losses from the drop in IXSE's long position.The idea behind iShares India 50 and IXSE 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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