Correlation Between IShares MSCI and IShares BRIC
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares BRIC 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 BRIC 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 BRIC 50, you can compare the effects of market volatilities on IShares MSCI and IShares BRIC 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 BRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares BRIC.
Diversification Opportunities for IShares MSCI and IShares BRIC
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Brazil and iShares BRIC 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares BRIC 50 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 BRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares BRIC 50 has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares BRIC go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares BRIC
Assuming the 90 days trading horizon iShares MSCI Brazil is expected to under-perform the IShares BRIC. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI Brazil is 1.64 times less risky than IShares BRIC. The etf trades about -0.09 of its potential returns per unit of risk. The iShares BRIC 50 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,681 in iShares BRIC 50 on September 2, 2024 and sell it today you would earn a total of 217.00 from holding iShares BRIC 50 or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Brazil vs. iShares BRIC 50
Performance |
| Timeline |
| iShares MSCI Brazil |
| iShares BRIC 50 |
IShares MSCI and IShares BRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares BRIC
The main advantage of trading using opposite IShares MSCI and IShares BRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares BRIC 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 BRIC will offset losses from the drop in IShares BRIC's long position.| IShares MSCI vs. iShares III Public | IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. iShares France Govt | IShares MSCI vs. iShares Edge MSCI |
| IShares BRIC vs. iShares Core MSCI | IShares BRIC vs. BlackRock ESG Multi Asset | IShares BRIC vs. Pershing Square Holdings | IShares BRIC vs. ASML Holding NV |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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