Correlation Between IShares China and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares China and IShares MSCI 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 China and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares China Large Cap and iShares MSCI Taiwan, you can compare the effects of market volatilities on IShares China and IShares MSCI 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 China with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and IShares MSCI.
Diversification Opportunities for IShares China and IShares MSCI
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares China Large Cap and iShares MSCI Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Taiwan and IShares China 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 China Large Cap are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Taiwan has no effect on the direction of IShares China i.e., IShares China and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares China and IShares MSCI
Considering the 90-day investment horizon iShares China Large Cap is expected to under-perform the IShares MSCI. In addition to that, IShares China is 1.99 times more volatile than iShares MSCI Taiwan. It trades about -0.16 of its total potential returns per unit of risk. iShares MSCI Taiwan is currently generating about -0.1 per unit of volatility. If you would invest 5,548 in iShares MSCI Taiwan on August 27, 2024 and sell it today you would lose (142.00) from holding iShares MSCI Taiwan or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares China Large Cap vs. iShares MSCI Taiwan
Performance |
| Timeline |
| iShares China Large |
| iShares MSCI Taiwan |
IShares China and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and IShares MSCI
The main advantage of trading using opposite IShares China and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| IShares China vs. iShares MSCI Brazil | IShares China vs. iShares MSCI Emerging | IShares China vs. iShares MSCI Japan | IShares China vs. iShares MSCI Hong |
| IShares MSCI vs. iShares MSCI South | IShares MSCI vs. iShares MSCI Hong | IShares MSCI vs. iShares MSCI Singapore | IShares MSCI vs. iShares MSCI Malaysia |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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