Correlation Between IShares MSCI and FlexShares International
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and FlexShares International 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 FlexShares International 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 FlexShares International Quality, you can compare the effects of market volatilities on IShares MSCI and FlexShares International 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 FlexShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and FlexShares International.
Diversification Opportunities for IShares MSCI and FlexShares International
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and FlexShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and FlexShares International Quali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares International 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 FlexShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares International has no effect on the direction of IShares MSCI i.e., IShares MSCI and FlexShares International go up and down completely randomly.
Pair Corralation between IShares MSCI and FlexShares International
Considering the 90-day investment horizon iShares MSCI EAFE is expected to generate 0.9 times more return on investment than FlexShares International. However, iShares MSCI EAFE is 1.12 times less risky than FlexShares International. It trades about -0.13 of its potential returns per unit of risk. FlexShares International Quality is currently generating about -0.18 per unit of risk. If you would invest 5,539 in iShares MSCI EAFE on August 30, 2024 and sell it today you would lose (141.00) from holding iShares MSCI EAFE or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI EAFE vs. FlexShares International Quali
Performance |
| Timeline |
| iShares MSCI EAFE |
| FlexShares International |
IShares MSCI and FlexShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and FlexShares International
The main advantage of trading using opposite IShares MSCI and FlexShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, FlexShares International 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 FlexShares International will offset losses from the drop in FlexShares International's long position.| IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. WisdomTree International SmallCap | IShares MSCI vs. iShares Russell Mid Cap |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |