Correlation Between IShares MSCI and FLFR
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and FLFR 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 FLFR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Canada and FLFR, you can compare the effects of market volatilities on IShares MSCI and FLFR 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 FLFR. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and FLFR.
Diversification Opportunities for IShares MSCI and FLFR
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and FLFR is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Canada and FLFR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLFR 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 Canada are associated (or correlated) with FLFR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLFR has no effect on the direction of IShares MSCI i.e., IShares MSCI and FLFR go up and down completely randomly.
Pair Corralation between IShares MSCI and FLFR
Considering the 90-day investment horizon IShares MSCI is expected to generate 1.87 times less return on investment than FLFR. But when comparing it to its historical volatility, iShares MSCI Canada is 1.16 times less risky than FLFR. It trades about 0.05 of its potential returns per unit of risk. FLFR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,865 in FLFR on October 9, 2024 and sell it today you would earn a total of 324.00 from holding FLFR or generate 11.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 26.26% |
| Values | Daily Returns |
iShares MSCI Canada vs. FLFR
Performance |
| Timeline |
| iShares MSCI Canada |
| FLFR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares MSCI and FLFR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and FLFR
The main advantage of trading using opposite IShares MSCI and FLFR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, FLFR 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 FLFR will offset losses from the drop in FLFR's long position.| IShares MSCI vs. iShares MSCI Australia | IShares MSCI vs. iShares MSCI Germany | IShares MSCI vs. iShares MSCI United | IShares MSCI vs. iShares MSCI Switzerland |
| FLFR vs. Franklin FTSE Germany | FLFR vs. Franklin FTSE United | FLFR vs. Franklin FTSE Mexico | FLFR vs. Franklin FTSE Australia |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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