Correlation Between IShares II and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares II 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 II 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 II Public and iShares MSCI EM, you can compare the effects of market volatilities on IShares II 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 II with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares II and IShares MSCI.
Diversification Opportunities for IShares II and IShares MSCI
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding iShares II Public and iShares MSCI EM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI EM and IShares II 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 II Public 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 EM has no effect on the direction of IShares II i.e., IShares II and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares II and IShares MSCI
Assuming the 90 days trading horizon iShares II Public is expected to under-perform the IShares MSCI. In addition to that, IShares II is 1.0 times more volatile than iShares MSCI EM. It trades about -0.03 of its total potential returns per unit of risk. iShares MSCI EM is currently generating about 0.06 per unit of volatility. If you would invest 3,750 in iShares MSCI EM on September 1, 2024 and sell it today you would earn a total of 257.00 from holding iShares MSCI EM or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
iShares II Public vs. iShares MSCI EM
Performance |
| Timeline |
| iShares II Public |
| iShares MSCI EM |
IShares II and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares II and IShares MSCI
The main advantage of trading using opposite IShares II and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares II 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 II vs. iShares Core MSCI | IShares II vs. BlackRock ESG Multi Asset | IShares II vs. Pershing Square Holdings | IShares II vs. ASML Holding NV |
| IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. BlackRock ESG Multi Asset | IShares MSCI vs. Pershing Square Holdings | IShares MSCI vs. ASML Holding NV |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |