Correlation Between IShares MSCI and Inspire Global
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Inspire Global 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 MSCI and Inspire Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI ACWI and Inspire Global Hope, you can compare the effects of market volatilities on IShares MSCI and Inspire Global 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 MSCI with a short position of Inspire Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Inspire Global.
Diversification Opportunities for IShares MSCI and Inspire Global
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Inspire is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI ACWI and Inspire Global Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Global Hope and IShares MSCI 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 MSCI ACWI are associated (or correlated) with Inspire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Global Hope has no effect on the direction of IShares MSCI i.e., IShares MSCI and Inspire Global go up and down completely randomly.
Pair Corralation between IShares MSCI and Inspire Global
Given the investment horizon of 90 days iShares MSCI ACWI is expected to generate 0.89 times more return on investment than Inspire Global. However, iShares MSCI ACWI is 1.13 times less risky than Inspire Global. It trades about 0.1 of its potential returns per unit of risk. Inspire Global Hope is currently generating about 0.06 per unit of risk. If you would invest 8,428 in iShares MSCI ACWI on August 30, 2024 and sell it today you would earn a total of 3,667 from holding iShares MSCI ACWI or generate 43.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI ACWI vs. Inspire Global Hope
Performance |
| Timeline |
| iShares MSCI ACWI |
| Inspire Global Hope |
IShares MSCI and Inspire Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Inspire Global
The main advantage of trading using opposite IShares MSCI and Inspire Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Inspire Global 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 Inspire Global will offset losses from the drop in Inspire Global's long position.| IShares MSCI vs. iShares MSCI ACWI | IShares MSCI vs. iShares MSCI All | IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. iShares JP Morgan |
| Inspire Global vs. Mackenzie Canadian Equity | Inspire Global vs. Mackenzie Large Cap | Inspire Global vs. BMO MSCI EAFE | Inspire Global vs. BMO Long Federal |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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