Correlation Between IShares MSCI and IShares China
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares China 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 IShares China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Australia and iShares China Large Cap, you can compare the effects of market volatilities on IShares MSCI and IShares China 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 IShares China. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares China.
Diversification Opportunities for IShares MSCI and IShares China
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Australia and iShares China Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China Large 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 Australia are associated (or correlated) with IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China Large has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares China go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares China
Considering the 90-day investment horizon IShares MSCI is expected to generate 2.24 times less return on investment than IShares China. But when comparing it to its historical volatility, iShares MSCI Australia is 1.96 times less risky than IShares China. It trades about 0.06 of its potential returns per unit of risk. iShares China Large Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,335 in iShares China Large Cap on August 27, 2024 and sell it today you would earn a total of 634.00 from holding iShares China Large Cap or generate 27.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Australia vs. iShares China Large Cap
Performance |
| Timeline |
| iShares MSCI Australia |
| iShares China Large |
IShares MSCI and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares China
The main advantage of trading using opposite IShares MSCI and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares China 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 China will offset losses from the drop in IShares China's long position.| IShares MSCI vs. iShares MSCI Canada | IShares MSCI vs. iShares MSCI Singapore | IShares MSCI vs. iShares MSCI Malaysia | IShares MSCI vs. iShares MSCI Germany |
| IShares China vs. iShares MSCI Singapore | IShares China vs. iShares MSCI Malaysia | IShares China vs. iShares MSCI Australia | IShares China vs. iShares MSCI South |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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