Correlation Between IShares Global and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Global and IShares MSCI 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 Global and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Aggregate and iShares MSCI Emerging, you can compare the effects of market volatilities on IShares Global and IShares MSCI 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 Global with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and IShares MSCI.
Diversification Opportunities for IShares Global and IShares MSCI
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and IShares is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Aggregate and iShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Emerging and IShares Global 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 Global Aggregate are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Emerging has no effect on the direction of IShares Global i.e., IShares Global and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Global and IShares MSCI
Assuming the 90 days trading horizon IShares Global is expected to generate 31.0 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, iShares Global Aggregate is 3.77 times less risky than IShares MSCI. It trades about 0.02 of its potential returns per unit of risk. iShares MSCI Emerging is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,794 in iShares MSCI Emerging on November 4, 2024 and sell it today you would earn a total of 205.00 from holding iShares MSCI Emerging or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Aggregate vs. iShares MSCI Emerging
Performance |
| Timeline |
| iShares Global Aggregate |
| iShares MSCI Emerging |
IShares Global and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and IShares MSCI
The main advantage of trading using opposite IShares Global and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| IShares Global vs. iShares MSCI Emerging | IShares Global vs. iShares CoreSP MidCap | IShares Global vs. iShares SP 500 | IShares Global vs. iShares Core MSCI |
| IShares MSCI vs. iShares Global Aggregate | IShares MSCI vs. iShares CoreSP MidCap | IShares MSCI vs. iShares SP 500 | IShares MSCI vs. iShares Core MSCI |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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