Correlation Between IShares International and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares International 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 International 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 International Developed and iShares MSCI Emerging, you can compare the effects of market volatilities on IShares International 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 International with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and IShares MSCI.
Diversification Opportunities for IShares International and IShares MSCI
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and IShares is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Develope and iShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Emerging and IShares International 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 International Developed 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 Emerging has no effect on the direction of IShares International i.e., IShares International and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares International and IShares MSCI
Given the investment horizon of 90 days iShares International Developed is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, iShares International Developed is 1.26 times less risky than IShares MSCI. The etf trades about -0.27 of its potential returns per unit of risk. The iShares MSCI Emerging is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 2,612 in iShares MSCI Emerging on August 27, 2024 and sell it today you would lose (120.00) from holding iShares MSCI Emerging or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares International Develope vs. iShares MSCI Emerging
Performance |
| Timeline |
| iShares International |
| iShares MSCI Emerging |
IShares International and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and IShares MSCI
The main advantage of trading using opposite IShares International and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International 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 International vs. iShares International Treasury | IShares International vs. iShares 1 3 Year | IShares International vs. iShares MSCI Emerging |
| IShares MSCI vs. Cambria Micro And | IShares MSCI vs. Invesco Actively Managed | IShares MSCI vs. iShares Trust | IShares MSCI vs. EMCS |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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