Correlation Between IShares MSCI and IShares VII
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares VII 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 VII into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Japan and iShares VII Public, you can compare the effects of market volatilities on IShares MSCI and IShares VII 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 VII. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares VII.
Diversification Opportunities for IShares MSCI and IShares VII
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Japan and iShares VII Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares VII Public 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 Japan are associated (or correlated) with IShares VII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares VII Public has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares VII go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares VII
Assuming the 90 days trading horizon iShares MSCI Japan is expected to generate 0.85 times more return on investment than IShares VII. However, iShares MSCI Japan is 1.17 times less risky than IShares VII. It trades about 0.32 of its potential returns per unit of risk. iShares VII Public is currently generating about -0.12 per unit of risk. If you would invest 474.00 in iShares MSCI Japan on August 26, 2024 and sell it today you would earn a total of 24.00 from holding iShares MSCI Japan or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Japan vs. iShares VII Public
Performance |
| Timeline |
| iShares MSCI Japan |
| iShares VII Public |
IShares MSCI and IShares VII Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares VII
The main advantage of trading using opposite IShares MSCI and IShares VII positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares VII 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 VII will offset losses from the drop in IShares VII's long position.| IShares MSCI vs. Leverage Shares 3x | IShares MSCI vs. Leverage Shares 3x | IShares MSCI vs. Leverage Shares 3x | IShares MSCI vs. WisdomTree Short GBP |
| IShares VII vs. iShares MSCI Japan | IShares VII vs. iShares JP Morgan | IShares VII vs. iShares MSCI Europe | IShares VII vs. iShares Nasdaq Biotechnology |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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