Correlation Between IShares MSCI and LS 1x
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and LS 1x 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 LS 1x 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 LS 1x Coinbase, you can compare the effects of market volatilities on IShares MSCI and LS 1x 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 LS 1x. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and LS 1x.
Diversification Opportunities for IShares MSCI and LS 1x
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and COI1 is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Japan and LS 1x Coinbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS 1x Coinbase 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 LS 1x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS 1x Coinbase has no effect on the direction of IShares MSCI i.e., IShares MSCI and LS 1x go up and down completely randomly.
Pair Corralation between IShares MSCI and LS 1x
Assuming the 90 days trading horizon IShares MSCI is expected to generate 11.75 times less return on investment than LS 1x. But when comparing it to its historical volatility, iShares MSCI Japan is 5.06 times less risky than LS 1x. It trades about 0.05 of its potential returns per unit of risk. LS 1x Coinbase is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 208.00 in LS 1x Coinbase on September 14, 2024 and sell it today you would earn a total of 446.00 from holding LS 1x Coinbase or generate 214.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Japan vs. LS 1x Coinbase
Performance |
| Timeline |
| iShares MSCI Japan |
| LS 1x Coinbase |
IShares MSCI and LS 1x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and LS 1x
The main advantage of trading using opposite IShares MSCI and LS 1x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, LS 1x 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 LS 1x will offset losses from the drop in LS 1x's long position.| IShares MSCI vs. iShares JP Morgan | IShares MSCI vs. iShares MSCI Europe | IShares MSCI vs. iShares Nasdaq Biotechnology | IShares MSCI vs. iShares Global Corp |
| LS 1x vs. iShares MSCI Japan | LS 1x vs. Amundi EUR High | LS 1x vs. iShares JP Morgan | LS 1x vs. Xtrackers MSCI |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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