Correlation Between IShares MSCI and SmartETFs Asia
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and SmartETFs Asia 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 SmartETFs Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Sweden and SmartETFs Asia Pacific, you can compare the effects of market volatilities on IShares MSCI and SmartETFs Asia 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 SmartETFs Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and SmartETFs Asia.
Diversification Opportunities for IShares MSCI and SmartETFs Asia
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and SmartETFs is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Sweden and SmartETFs Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartETFs Asia Pacific 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 Sweden are associated (or correlated) with SmartETFs Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartETFs Asia Pacific has no effect on the direction of IShares MSCI i.e., IShares MSCI and SmartETFs Asia go up and down completely randomly.
Pair Corralation between IShares MSCI and SmartETFs Asia
Considering the 90-day investment horizon iShares MSCI Sweden is expected to generate 1.22 times more return on investment than SmartETFs Asia. However, IShares MSCI is 1.22 times more volatile than SmartETFs Asia Pacific. It trades about 0.25 of its potential returns per unit of risk. SmartETFs Asia Pacific is currently generating about 0.09 per unit of risk. If you would invest 3,743 in iShares MSCI Sweden on October 20, 2024 and sell it today you would earn a total of 181.00 from holding iShares MSCI Sweden or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Sweden vs. SmartETFs Asia Pacific
Performance |
| Timeline |
| iShares MSCI Sweden |
| SmartETFs Asia Pacific |
IShares MSCI and SmartETFs Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and SmartETFs Asia
The main advantage of trading using opposite IShares MSCI and SmartETFs Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, SmartETFs Asia 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 SmartETFs Asia will offset losses from the drop in SmartETFs Asia's long position.| IShares MSCI vs. iShares MSCI Netherlands | IShares MSCI vs. iShares MSCI Belgium | IShares MSCI vs. iShares MSCI Switzerland | IShares MSCI vs. iShares MSCI Austria |
| SmartETFs Asia vs. Matthews China Active | SmartETFs Asia vs. MAYBANK EMERGING ETF | SmartETFs Asia vs. Matthews Emerging Markets | SmartETFs Asia vs. JP Morgan Exchange Traded |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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