Correlation Between IShares Latin and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Latin 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 Latin 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 Latin America and iShares MSCI Malaysia, you can compare the effects of market volatilities on IShares Latin 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 Latin with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Latin and IShares MSCI.
Diversification Opportunities for IShares Latin and IShares MSCI
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares Latin America and iShares MSCI Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Malaysia and IShares Latin 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 Latin America 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 Malaysia has no effect on the direction of IShares Latin i.e., IShares Latin and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Latin and IShares MSCI
Considering the 90-day investment horizon iShares Latin America is expected to under-perform the IShares MSCI. In addition to that, IShares Latin is 1.26 times more volatile than iShares MSCI Malaysia. It trades about -0.24 of its total potential returns per unit of risk. iShares MSCI Malaysia is currently generating about -0.11 per unit of volatility. If you would invest 2,500 in iShares MSCI Malaysia on August 28, 2024 and sell it today you would lose (46.00) from holding iShares MSCI Malaysia or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Latin America vs. iShares MSCI Malaysia
Performance |
| Timeline |
| iShares Latin America |
| iShares MSCI Malaysia |
IShares Latin and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Latin and IShares MSCI
The main advantage of trading using opposite IShares Latin and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Latin 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 Latin vs. iShares China Large Cap | IShares Latin vs. iShares MSCI Mexico | IShares Latin vs. iShares MSCI South | IShares Latin vs. iShares MSCI Japan |
| IShares MSCI vs. iShares MSCI Singapore | IShares MSCI vs. iShares MSCI Taiwan | IShares MSCI vs. iShares MSCI Australia | IShares MSCI vs. iShares MSCI Hong |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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