Correlation Between IShares Govt and IShares MSCI
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By analyzing existing cross correlation between iShares Govt Bond and iShares MSCI USA, you can compare the effects of market volatilities on IShares Govt 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 Govt with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Govt and IShares MSCI.
Diversification Opportunities for IShares Govt and IShares MSCI
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding iShares Govt Bond and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and IShares Govt 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 Govt Bond 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 USA has no effect on the direction of IShares Govt i.e., IShares Govt and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Govt and IShares MSCI
Assuming the 90 days trading horizon IShares Govt is expected to generate 5.38 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, iShares Govt Bond is 3.32 times less risky than IShares MSCI. It trades about 0.12 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 47,360 in iShares MSCI USA on August 31, 2024 and sell it today you would earn a total of 7,940 from holding iShares MSCI USA or generate 16.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Govt Bond vs. iShares MSCI USA
Performance |
| Timeline |
| iShares Govt Bond |
| iShares MSCI USA |
IShares Govt and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Govt and IShares MSCI
The main advantage of trading using opposite IShares Govt and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Govt 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 Govt vs. iShares Global AAA AA | IShares Govt vs. iShares Smart City | IShares Govt vs. iShares Broad High | IShares Govt vs. iShares Emerging Markets |
| IShares MSCI vs. iShares Govt Bond | IShares MSCI vs. iShares Global AAA AA | IShares MSCI vs. iShares Smart City | IShares MSCI vs. iShares Broad High |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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