Correlation Between IShares MSCI and Vanguard International
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Vanguard International 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 MSCI and Vanguard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Intl and Vanguard International Dividend, you can compare the effects of market volatilities on IShares MSCI and Vanguard International 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 MSCI with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Vanguard International.
Diversification Opportunities for IShares MSCI and Vanguard International
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Vanguard is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Intl and Vanguard International Dividen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and IShares MSCI 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 MSCI Intl are associated (or correlated) with Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of IShares MSCI i.e., IShares MSCI and Vanguard International go up and down completely randomly.
Pair Corralation between IShares MSCI and Vanguard International
Given the investment horizon of 90 days iShares MSCI Intl is expected to generate 1.06 times more return on investment than Vanguard International. However, IShares MSCI is 1.06 times more volatile than Vanguard International Dividend. It trades about -0.09 of its potential returns per unit of risk. Vanguard International Dividend is currently generating about -0.14 per unit of risk. If you would invest 3,944 in iShares MSCI Intl on August 30, 2024 and sell it today you would lose (58.00) from holding iShares MSCI Intl or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Intl vs. Vanguard International Dividen
Performance |
| Timeline |
| iShares MSCI Intl |
| Vanguard International |
IShares MSCI and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Vanguard International
The main advantage of trading using opposite IShares MSCI and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Vanguard International 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 Vanguard International will offset losses from the drop in Vanguard International's long position.| IShares MSCI vs. iShares MSCI Intl | IShares MSCI vs. iShares Edge MSCI | IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. iShares MSCI Intl |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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