Correlation Between IShares MSCI and IShares Corp
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares Corp 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 Corp 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 Corp Bond, you can compare the effects of market volatilities on IShares MSCI and IShares Corp 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 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares Corp.
Diversification Opportunities for IShares MSCI and IShares Corp
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Japan and iShares Corp Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Corp Bond 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 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Corp Bond has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares Corp go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares Corp
Assuming the 90 days trading horizon iShares MSCI Japan is expected to generate 3.63 times more return on investment than IShares Corp. However, IShares MSCI is 3.63 times more volatile than iShares Corp Bond. It trades about 0.04 of its potential returns per unit of risk. iShares Corp Bond is currently generating about 0.14 per unit of risk. If you would invest 420.00 in iShares MSCI Japan on August 30, 2024 and sell it today you would earn a total of 74.00 from holding iShares MSCI Japan or generate 17.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
iShares MSCI Japan vs. iShares Corp Bond
Performance |
| Timeline |
| iShares MSCI Japan |
| iShares Corp Bond |
IShares MSCI and IShares Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares Corp
The main advantage of trading using opposite IShares MSCI and IShares Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares Corp 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 Corp will offset losses from the drop in IShares Corp's long position.| IShares MSCI vs. Vanguard FTSE Developed | IShares MSCI vs. Leverage Shares 2x | IShares MSCI vs. Amundi Index Solutions | IShares MSCI vs. Amundi Index Solutions |
| IShares Corp vs. iShares MSCI Japan | IShares Corp vs. iShares JP Morgan | IShares Corp vs. iShares MSCI Europe | IShares Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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