Correlation Between IShares MSCI and Capital Group
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Capital Group 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 Capital Group 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 Capital Group International, you can compare the effects of market volatilities on IShares MSCI and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Capital Group.
Diversification Opportunities for IShares MSCI and Capital Group
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Capital is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Intern has no effect on the direction of IShares MSCI i.e., IShares MSCI and Capital Group go up and down completely randomly.
Pair Corralation between IShares MSCI and Capital Group
Considering the 90-day investment horizon iShares MSCI EAFE is expected to under-perform the Capital Group. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI EAFE is 1.0 times less risky than Capital Group. The etf trades about -0.01 of its potential returns per unit of risk. The Capital Group International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,598 in Capital Group International on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Capital Group International or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares MSCI EAFE vs. Capital Group International
Performance |
| Timeline |
| iShares MSCI EAFE |
| Capital Group Intern |
IShares MSCI and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Capital Group
The main advantage of trading using opposite IShares MSCI and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| IShares MSCI vs. Invesco SP International | IShares MSCI vs. Invesco SP International | IShares MSCI vs. Invesco FTSE RAFI | IShares MSCI vs. Invesco SP Emerging |
| Capital Group vs. Capital Group Dividend | Capital Group vs. Capital Group Global | Capital Group vs. Capital Group Growth | Capital Group vs. Capital Group Core |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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