Correlation Between IShares VII and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares VII 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 VII 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 VII PLC and iShares MSCI Global, you can compare the effects of market volatilities on IShares VII 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 VII with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and IShares MSCI.
Diversification Opportunities for IShares VII and IShares MSCI
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and IShares is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and iShares MSCI Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Global and IShares VII 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 VII PLC 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 Global has no effect on the direction of IShares VII i.e., IShares VII and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares VII and IShares MSCI
Assuming the 90 days trading horizon iShares VII PLC is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, iShares VII PLC is 3.27 times less risky than IShares MSCI. The etf trades about -0.04 of its potential returns per unit of risk. The iShares MSCI Global is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 720.00 in iShares MSCI Global on October 11, 2024 and sell it today you would earn a total of 31.00 from holding iShares MSCI Global or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares VII PLC vs. iShares MSCI Global
Performance |
| Timeline |
| iShares VII PLC |
| iShares MSCI Global |
IShares VII and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares VII and IShares MSCI
The main advantage of trading using opposite IShares VII and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII 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.The idea behind iShares VII PLC and iShares MSCI Global pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares MSCI vs. iShares Corp Bond | IShares MSCI vs. iShares Emerging Asia | IShares MSCI vs. iShares VII PLC | IShares MSCI vs. iShares Asia Property |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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