Correlation Between Invesco China and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Invesco China 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 Invesco China and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco China Technology and iShares MSCI Hong, you can compare the effects of market volatilities on Invesco China 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 Invesco China with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco China and IShares MSCI.
Diversification Opportunities for Invesco China and IShares MSCI
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Invesco China Technology and iShares MSCI Hong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Hong and Invesco China 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 Invesco China Technology 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 Hong has no effect on the direction of Invesco China i.e., Invesco China and IShares MSCI go up and down completely randomly.
Pair Corralation between Invesco China and IShares MSCI
Given the investment horizon of 90 days Invesco China Technology is expected to generate 1.62 times more return on investment than IShares MSCI. However, Invesco China is 1.62 times more volatile than iShares MSCI Hong. It trades about 0.02 of its potential returns per unit of risk. iShares MSCI Hong is currently generating about 0.0 per unit of risk. If you would invest 3,955 in Invesco China Technology on September 12, 2024 and sell it today you would earn a total of 214.00 from holding Invesco China Technology or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco China Technology vs. iShares MSCI Hong
Performance |
| Timeline |
| Invesco China Technology |
| iShares MSCI Hong |
Invesco China and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco China and IShares MSCI
The main advantage of trading using opposite Invesco China and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco China 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.| Invesco China vs. KraneShares CSI China | Invesco China vs. iShares MSCI China | Invesco China vs. Global X MSCI | Invesco China vs. Xtrackers Harvest CSI |
| IShares MSCI vs. KraneShares CSI China | IShares MSCI vs. Invesco China Technology | IShares MSCI vs. iShares MSCI India | IShares MSCI vs. Xtrackers Harvest CSI |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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