Correlation Between IShares MSCI and IShares Global
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares 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 IShares 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 iShares Global 100, you can compare the effects of market volatilities on IShares MSCI and IShares 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 IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares Global.
Diversification Opportunities for IShares MSCI and IShares Global
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI ACWI and iShares Global 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global 100 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 IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global 100 has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares Global go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares Global
Given the investment horizon of 90 days iShares MSCI ACWI is expected to generate 0.75 times more return on investment than IShares Global. However, iShares MSCI ACWI is 1.33 times less risky than IShares Global. It trades about 0.12 of its potential returns per unit of risk. iShares Global 100 is currently generating about -0.03 per unit of risk. If you would invest 19,600 in iShares MSCI ACWI on August 30, 2024 and sell it today you would earn a total of 356.60 from holding iShares MSCI ACWI or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares MSCI ACWI vs. iShares Global 100
Performance |
| Timeline |
| iShares MSCI ACWI |
| iShares Global 100 |
IShares MSCI and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares Global
The main advantage of trading using opposite IShares MSCI and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares 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 IShares Global will offset losses from the drop in IShares Global's long position.| IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. SPDR SSGA Gender | IShares MSCI vs. iShares MSCI KLD | IShares MSCI vs. SPDR SP 500 |
| IShares Global vs. iShares Europe ETF | IShares Global vs. iShares Global Financials | IShares Global vs. iShares Global Healthcare | IShares Global vs. iShares Global Comm |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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