Correlation Between IShares Core and Matthews Emerging
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core MSCI and Matthews Emerging Markets, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of Matthews Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Matthews Emerging.
Diversification Opportunities for IShares Core and Matthews Emerging
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Matthews is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI 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 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 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 Core i.e., IShares Core and Matthews Emerging go up and down completely randomly.
Pair Corralation between IShares Core and Matthews Emerging
Given the investment horizon of 90 days iShares Core MSCI is expected to generate 0.92 times more return on investment than Matthews Emerging. However, iShares Core MSCI is 1.09 times less risky than Matthews Emerging. It trades about 0.04 of its potential returns per unit of risk. Matthews Emerging Markets is currently generating about 0.0 per unit of risk. If you would invest 4,675 in iShares Core MSCI on August 31, 2024 and sell it today you would earn a total of 736.00 from holding iShares Core MSCI or generate 15.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 56.35% |
| Values | Daily Returns |
iShares Core MSCI vs. Matthews Emerging Markets
Performance |
| Timeline |
| iShares Core MSCI |
| Matthews Emerging Markets |
IShares Core and Matthews Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Matthews Emerging
The main advantage of trading using opposite IShares Core and Matthews Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core vs. iShares MSCI China | IShares Core vs. iShares Dividend and | IShares Core vs. iShares MSCI Frontier | IShares Core vs. iShares Exponential Technologies |
| Matthews Emerging vs. FT Vest Equity | Matthews Emerging vs. Northern Lights | Matthews Emerging vs. Dimensional International High | Matthews Emerging vs. Matthews China Discovery |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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