Correlation Between IShares MSCI and National Security
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and National Security 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 National Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Emerging and National Security Emerging, you can compare the effects of market volatilities on IShares MSCI and National Security 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 National Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and National Security.
Diversification Opportunities for IShares MSCI and National Security
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and National is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Emerging and National Security Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Security 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 Emerging are associated (or correlated) with National Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Security has no effect on the direction of IShares MSCI i.e., IShares MSCI and National Security go up and down completely randomly.
Pair Corralation between IShares MSCI and National Security
Considering the 90-day investment horizon iShares MSCI Emerging is expected to generate 1.15 times more return on investment than National Security. However, IShares MSCI is 1.15 times more volatile than National Security Emerging. It trades about -0.18 of its potential returns per unit of risk. National Security Emerging is currently generating about -0.23 per unit of risk. If you would invest 4,512 in iShares MSCI Emerging on August 26, 2024 and sell it today you would lose (184.00) from holding iShares MSCI Emerging or give up 4.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Emerging vs. National Security Emerging
Performance |
| Timeline |
| iShares MSCI Emerging |
| National Security |
IShares MSCI and National Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and National Security
The main advantage of trading using opposite IShares MSCI and National Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, National Security 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 National Security will offset losses from the drop in National Security's long position.| IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. iShares China Large Cap | IShares MSCI vs. iShares MSCI Brazil | IShares MSCI vs. iShares Russell 2000 |
| National Security vs. Invesco PureBeta MSCI | National Security vs. Aquagold International | National Security vs. Morningstar Unconstrained Allocation | National Security vs. High Yield Municipal Fund |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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