Correlation Between IShares MSCI and EGPT
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and EGPT 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 EGPT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Israel and EGPT, you can compare the effects of market volatilities on IShares MSCI and EGPT 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 EGPT. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and EGPT.
Diversification Opportunities for IShares MSCI and EGPT
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IShares and EGPT is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Israel and EGPT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGPT 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 Israel are associated (or correlated) with EGPT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGPT has no effect on the direction of IShares MSCI i.e., IShares MSCI and EGPT go up and down completely randomly.
Pair Corralation between IShares MSCI and EGPT
Considering the 90-day investment horizon iShares MSCI Israel is expected to generate 1.96 times more return on investment than EGPT. However, IShares MSCI is 1.96 times more volatile than EGPT. It trades about 0.07 of its potential returns per unit of risk. EGPT is currently generating about -0.08 per unit of risk. If you would invest 5,691 in iShares MSCI Israel on September 12, 2024 and sell it today you would earn a total of 1,973 from holding iShares MSCI Israel or generate 34.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 1.14% |
| Values | Daily Returns |
iShares MSCI Israel vs. EGPT
Performance |
| Timeline |
| iShares MSCI Israel |
| EGPT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares MSCI and EGPT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and EGPT
The main advantage of trading using opposite IShares MSCI and EGPT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, EGPT 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 EGPT will offset losses from the drop in EGPT's long position.| IShares MSCI vs. iShares MSCI UAE | IShares MSCI vs. iShares MSCI Qatar | IShares MSCI vs. iShares MSCI Philippines |
| EGPT vs. iShares MSCI UAE | EGPT vs. iShares MSCI Qatar | EGPT vs. iShares MSCI Israel | EGPT vs. iShares MSCI Philippines |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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