Correlation Between ETF Series and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both ETF Series 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 ETF Series and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and iShares MSCI USA, you can compare the effects of market volatilities on ETF Series 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 ETF Series with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and IShares MSCI.
Diversification Opportunities for ETF Series and IShares MSCI
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ETF and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and ETF Series 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 ETF Series Solutions 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 USA has no effect on the direction of ETF Series i.e., ETF Series and IShares MSCI go up and down completely randomly.
Pair Corralation between ETF Series and IShares MSCI
Given the investment horizon of 90 days ETF Series is expected to generate 1.27 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, ETF Series Solutions is 1.3 times less risky than IShares MSCI. It trades about 0.12 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 11,409 in iShares MSCI USA on August 30, 2024 and sell it today you would earn a total of 7,016 from holding iShares MSCI USA or generate 61.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 61.41% |
| Values | Daily Returns |
ETF Series Solutions vs. iShares MSCI USA
Performance |
| Timeline |
| ETF Series Solutions |
| iShares MSCI USA |
ETF Series and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and IShares MSCI
The main advantage of trading using opposite ETF Series and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series 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.| ETF Series vs. iShares MSCI USA | ETF Series vs. ABIVAX Socit Anonyme | ETF Series vs. HUMANA INC | ETF Series vs. SCOR PK |
| IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. Invesco SP 500 |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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