Correlation Between IShares Core and IShares International
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares International 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 Core and IShares International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and iShares International Dividend, you can compare the effects of market volatilities on IShares Core and IShares International 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 Core with a short position of IShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares International.
Diversification Opportunities for IShares Core and IShares International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and iShares International Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International and IShares Core 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 Core MSCI are associated (or correlated) with IShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares International has no effect on the direction of IShares Core i.e., IShares Core and IShares International go up and down completely randomly.
Pair Corralation between IShares Core and IShares International
Given the investment horizon of 90 days iShares Core MSCI is expected to generate 1.1 times more return on investment than IShares International. However, IShares Core is 1.1 times more volatile than iShares International Dividend. It trades about 0.0 of its potential returns per unit of risk. iShares International Dividend is currently generating about -0.01 per unit of risk. If you would invest 5,540 in iShares Core MSCI on September 12, 2024 and sell it today you would lose (1.00) from holding iShares Core MSCI or give up 0.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. iShares International Dividend
Performance |
| Timeline |
| iShares Core MSCI |
| iShares International |
IShares Core and IShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares International
The main advantage of trading using opposite IShares Core and IShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares International 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 International will offset losses from the drop in IShares International's long position.| IShares Core vs. Freedom Day Dividend | IShares Core vs. Franklin Templeton ETF | IShares Core vs. iShares MSCI China | IShares Core vs. Tidal Trust II |
| IShares International vs. iShares MSCI Intl | IShares International vs. iShares MSCI Intl | IShares International vs. iShares MSCI Intl | IShares International vs. iShares Currency Hedged |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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