Correlation Between IShares Core and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core MSCI and iShares MSCI Intl, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares MSCI.
Diversification Opportunities for IShares Core and IShares MSCI
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and iShares MSCI Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Intl 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 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 Intl has no effect on the direction of IShares Core i.e., IShares Core and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Core and IShares MSCI
Given the investment horizon of 90 days iShares Core MSCI is expected to under-perform the IShares MSCI. In addition to that, IShares Core is 1.13 times more volatile than iShares MSCI Intl. It trades about -0.19 of its total potential returns per unit of risk. iShares MSCI Intl is currently generating about -0.12 per unit of volatility. If you would invest 3,938 in iShares MSCI Intl on August 31, 2024 and sell it today you would lose (84.00) from holding iShares MSCI Intl or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. iShares MSCI Intl
Performance |
| Timeline |
| iShares Core MSCI |
| iShares MSCI Intl |
IShares Core and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares MSCI
The main advantage of trading using opposite IShares Core and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core vs. iShares Core MSCI | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares MSCI Europe | IShares Core vs. iShares Currency Hedged |
| IShares MSCI vs. iShares MSCI Intl | IShares MSCI vs. iShares Edge MSCI | IShares MSCI vs. iShares Edge MSCI | IShares MSCI vs. iShares MSCI Emerging |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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