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 Brazil 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
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Brazil 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 Brazil 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 Brazil is expected to generate 0.55 times more return on investment than IShares China. However, iShares MSCI Brazil is 1.82 times less risky than IShares China. It trades about -0.13 of its potential returns per unit of risk. iShares China Large Cap is currently generating about -0.16 per unit of risk. If you would invest 2,854 in iShares MSCI Brazil on August 27, 2024 and sell it today you would lose (103.00) from holding iShares MSCI Brazil or give up 3.61% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
iShares MSCI Brazil vs. iShares China Large Cap
Performance |
Timeline |
iShares MSCI Brazil |
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 China Large Cap | IShares MSCI vs. iShares MSCI Mexico | IShares MSCI vs. iShares MSCI South | IShares MSCI vs. iShares MSCI Japan |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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