Correlation Between IShares Convertible and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Convertible 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 Convertible 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 Convertible Bond and iShares MSCI Min, you can compare the effects of market volatilities on IShares Convertible 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 Convertible with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Convertible and IShares MSCI.
Diversification Opportunities for IShares Convertible and IShares MSCI
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares Convertible Bond and iShares MSCI Min in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Min and IShares Convertible 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 Convertible Bond 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 Min has no effect on the direction of IShares Convertible i.e., IShares Convertible and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Convertible and IShares MSCI
Assuming the 90 days trading horizon iShares Convertible Bond is expected to generate 1.46 times more return on investment than IShares MSCI. However, IShares Convertible is 1.46 times more volatile than iShares MSCI Min. It trades about 0.11 of its potential returns per unit of risk. iShares MSCI Min is currently generating about 0.13 per unit of risk. If you would invest 1,417 in iShares Convertible Bond on August 26, 2024 and sell it today you would earn a total of 316.00 from holding iShares Convertible Bond or generate 22.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Convertible Bond vs. iShares MSCI Min
Performance |
| Timeline |
| iShares Convertible Bond |
| iShares MSCI Min |
IShares Convertible and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Convertible and IShares MSCI
The main advantage of trading using opposite IShares Convertible and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Convertible 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 Convertible vs. BMO Mid Federal | IShares Convertible vs. BMO Short Corporate | IShares Convertible vs. BMO Emerging Markets | IShares Convertible vs. BMO Long Corporate |
| IShares MSCI vs. iShares MSCI Min | IShares MSCI vs. iShares MSCI Min | IShares MSCI vs. iShares Floating Rate | IShares MSCI vs. BMO Aggregate Bond |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Stocks Directory Find actively traded stocks across global markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |