Correlation Between IShares Emerging and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Emerging and IShares MSCI 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 Emerging and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Emerging Markets and iShares MSCI Emerging, you can compare the effects of market volatilities on IShares Emerging and IShares MSCI 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 Emerging with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Emerging and IShares MSCI.
Diversification Opportunities for IShares Emerging and IShares MSCI
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares Emerging Markets and iShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Emerging and IShares Emerging 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 Emerging Markets are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Emerging has no effect on the direction of IShares Emerging i.e., IShares Emerging and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Emerging and IShares MSCI
Given the investment horizon of 90 days iShares Emerging Markets is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, iShares Emerging Markets is 1.19 times less risky than IShares MSCI. The etf trades about -0.15 of its potential returns per unit of risk. The iShares MSCI Emerging is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 7,573 in iShares MSCI Emerging on September 1, 2024 and sell it today you would lose (194.00) from holding iShares MSCI Emerging or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Emerging Markets vs. iShares MSCI Emerging
Performance |
| Timeline |
| iShares Emerging Markets |
| iShares MSCI Emerging |
IShares Emerging and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Emerging and IShares MSCI
The main advantage of trading using opposite IShares Emerging and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Emerging position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| IShares Emerging vs. iShares Global Infrastructure | IShares Emerging vs. iShares MSCI Emerging | IShares Emerging vs. iShares MSCI New | IShares Emerging vs. iShares International Developed |
| IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. iShares MSCI Europe | IShares MSCI vs. iShares MSCI All | IShares MSCI vs. iShares Emerging Markets |
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.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |