Correlation Between IShares MSCI and Exchange Listed
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Exchange Listed 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 Exchange Listed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI EAFE and Exchange Listed Funds, you can compare the effects of market volatilities on IShares MSCI and Exchange Listed 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 Exchange Listed. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Exchange Listed.
Diversification Opportunities for IShares MSCI and Exchange Listed
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Exchange is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and Exchange Listed Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Listed Funds 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 EAFE are associated (or correlated) with Exchange Listed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Listed Funds has no effect on the direction of IShares MSCI i.e., IShares MSCI and Exchange Listed go up and down completely randomly.
Pair Corralation between IShares MSCI and Exchange Listed
Considering the 90-day investment horizon iShares MSCI EAFE is expected to under-perform the Exchange Listed. In addition to that, IShares MSCI is 1.03 times more volatile than Exchange Listed Funds. It trades about -0.01 of its total potential returns per unit of risk. Exchange Listed Funds is currently generating about 0.05 per unit of volatility. If you would invest 2,531 in Exchange Listed Funds on September 1, 2024 and sell it today you would earn a total of 123.00 from holding Exchange Listed Funds or generate 4.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 99.21% |
Values | Daily Returns |
iShares MSCI EAFE vs. Exchange Listed Funds
Performance |
Timeline |
iShares MSCI EAFE |
Exchange Listed Funds |
IShares MSCI and Exchange Listed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares MSCI and Exchange Listed
The main advantage of trading using opposite IShares MSCI and Exchange Listed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Exchange Listed 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 Exchange Listed will offset losses from the drop in Exchange Listed's long position.IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. iShares Core Aggregate | IShares MSCI vs. iShares Russell 2000 | IShares MSCI vs. iShares MSCI Japan |
Exchange Listed vs. iShares ESG Aggregate | Exchange Listed vs. SPDR MSCI Emerging | Exchange Listed vs. Aquagold International | Exchange Listed vs. Thrivent High Yield |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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