Correlation Between IShares MSCI and Wahed Dow
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Wahed Dow 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 Wahed Dow 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 Wahed Dow Jones, you can compare the effects of market volatilities on IShares MSCI and Wahed Dow 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 Wahed Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Wahed Dow.
Diversification Opportunities for IShares MSCI and Wahed Dow
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Wahed is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Emerging and Wahed Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahed Dow Jones 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 Wahed Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahed Dow Jones has no effect on the direction of IShares MSCI i.e., IShares MSCI and Wahed Dow go up and down completely randomly.
Pair Corralation between IShares MSCI and Wahed Dow
Given the investment horizon of 90 days iShares MSCI Emerging is expected to generate 1.21 times more return on investment than Wahed Dow. However, IShares MSCI is 1.21 times more volatile than Wahed Dow Jones. It trades about -0.13 of its potential returns per unit of risk. Wahed Dow Jones is currently generating about -0.22 per unit of risk. If you would invest 4,878 in iShares MSCI Emerging on August 30, 2024 and sell it today you would lose (151.00) from holding iShares MSCI Emerging or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares MSCI Emerging vs. Wahed Dow Jones
Performance |
| Timeline |
| iShares MSCI Emerging |
| Wahed Dow Jones |
IShares MSCI and Wahed Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Wahed Dow
The main advantage of trading using opposite IShares MSCI and Wahed Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Wahed Dow 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 Wahed Dow will offset losses from the drop in Wahed Dow's long position.| IShares MSCI vs. iShares Edge MSCI | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI Intl | IShares MSCI vs. iShares Equity Factor |
| Wahed Dow vs. Stance Equity ESG | Wahed Dow vs. Aquagold International | Wahed Dow vs. Morningstar Unconstrained Allocation | Wahed Dow 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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