Correlation Between IShares Emerging and IShares Core
Can any of the company-specific risk be diversified away by investing in both IShares Emerging and IShares Core 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 Emerging and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Emerging Asia and iShares Core MSCI, you can compare the effects of market volatilities on IShares Emerging and IShares Core 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 Emerging with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Emerging and IShares Core.
Diversification Opportunities for IShares Emerging and IShares Core
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and IShares is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares Emerging Asia and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI and IShares Emerging 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 Emerging Asia are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core MSCI has no effect on the direction of IShares Emerging i.e., IShares Emerging and IShares Core go up and down completely randomly.
Pair Corralation between IShares Emerging and IShares Core
Assuming the 90 days trading horizon iShares Emerging Asia is expected to under-perform the IShares Core. But the etf apears to be less risky and, when comparing its historical volatility, iShares Emerging Asia is 2.66 times less risky than IShares Core. The etf trades about -0.05 of its potential returns per unit of risk. The iShares Core MSCI is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,424 in iShares Core MSCI on November 2, 2024 and sell it today you would earn a total of 41.00 from holding iShares Core MSCI or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Emerging Asia vs. iShares Core MSCI
Performance |
| Timeline |
| iShares Emerging Asia |
| iShares Core MSCI |
IShares Emerging and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Emerging and IShares Core
The main advantage of trading using opposite IShares Emerging and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Emerging position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| IShares Emerging vs. iShares Corp Bond | IShares Emerging vs. iShares MSCI Global | IShares Emerging vs. iShares VII PLC | IShares Emerging vs. iShares Asia Property |
| IShares Core vs. iShares Corp Bond | IShares Core vs. iShares Emerging Asia | IShares Core vs. iShares MSCI Global | IShares Core vs. iShares VII PLC |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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