Correlation Between IShares MSCI and Matthews Emerging
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Matthews Emerging 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 Matthews Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Frontier and Matthews Emerging Markets, you can compare the effects of market volatilities on IShares MSCI and Matthews Emerging 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 Matthews Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Matthews Emerging.
Diversification Opportunities for IShares MSCI and Matthews Emerging
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Matthews is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Frontier and Matthews Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Emerging Markets 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 Frontier are associated (or correlated) with Matthews Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Emerging Markets has no effect on the direction of IShares MSCI i.e., IShares MSCI and Matthews Emerging go up and down completely randomly.
Pair Corralation between IShares MSCI and Matthews Emerging
Allowing for the 90-day total investment horizon iShares MSCI Frontier is expected to generate 0.39 times more return on investment than Matthews Emerging. However, iShares MSCI Frontier is 2.53 times less risky than Matthews Emerging. It trades about -0.05 of its potential returns per unit of risk. Matthews Emerging Markets is currently generating about -0.07 per unit of risk. If you would invest 2,765 in iShares MSCI Frontier on September 4, 2024 and sell it today you would lose (7.00) from holding iShares MSCI Frontier or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Frontier vs. Matthews Emerging Markets
Performance |
| Timeline |
| iShares MSCI Frontier |
| Matthews Emerging Markets |
IShares MSCI and Matthews Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Matthews Emerging
The main advantage of trading using opposite IShares MSCI and Matthews Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Matthews Emerging 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 Matthews Emerging will offset losses from the drop in Matthews Emerging's long position.| IShares MSCI vs. SCOR PK | IShares MSCI vs. HUMANA INC | IShares MSCI vs. Aquagold International | IShares MSCI vs. Barloworld Ltd ADR |
| Matthews Emerging vs. Matthews Asia Innovators | Matthews Emerging vs. Columbia EM Core | Matthews Emerging vs. MAYBANK EMERGING ETF | Matthews Emerging vs. Matthews China Active |
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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