Correlation Between IShares Core and IShares Developed
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares Developed 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 Core and IShares Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and iShares Developed Markets, you can compare the effects of market volatilities on IShares Core and IShares Developed 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 Core with a short position of IShares Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares Developed.
Diversification Opportunities for IShares Core and IShares Developed
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and IShares is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and iShares Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Developed Markets and IShares Core 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 Core MSCI are associated (or correlated) with IShares Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Developed Markets has no effect on the direction of IShares Core i.e., IShares Core and IShares Developed go up and down completely randomly.
Pair Corralation between IShares Core and IShares Developed
Assuming the 90 days trading horizon IShares Core is expected to generate 1.08 times less return on investment than IShares Developed. In addition to that, IShares Core is 1.1 times more volatile than iShares Developed Markets. It trades about 0.08 of its total potential returns per unit of risk. iShares Developed Markets is currently generating about 0.09 per unit of volatility. If you would invest 1,954 in iShares Developed Markets on September 3, 2024 and sell it today you would earn a total of 373.00 from holding iShares Developed Markets or generate 19.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. iShares Developed Markets
Performance |
| Timeline |
| iShares Core MSCI |
| iShares Developed Markets |
IShares Core and IShares Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares Developed
The main advantage of trading using opposite IShares Core and IShares Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares Developed 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 Developed will offset losses from the drop in IShares Developed's long position.| IShares Core vs. Vanguard FTSE Developed | IShares Core vs. HSBC MSCI Japan | IShares Core vs. iShares II Public | IShares Core vs. Hydratec Industries NV |
| IShares Developed vs. iShares III Public | IShares Developed vs. iShares Core MSCI | IShares Developed vs. iShares France Govt | IShares Developed vs. iShares Edge MSCI |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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