Correlation Between Exchange Traded and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Exchange Traded 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 Exchange Traded and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Traded Concepts and iShares MSCI India, you can compare the effects of market volatilities on Exchange Traded 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 Exchange Traded with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Traded and IShares MSCI.
Diversification Opportunities for Exchange Traded and IShares MSCI
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Exchange and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Traded Concepts and iShares MSCI India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI India and Exchange Traded 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 Exchange Traded Concepts 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 India has no effect on the direction of Exchange Traded i.e., Exchange Traded and IShares MSCI go up and down completely randomly.
Pair Corralation between Exchange Traded and IShares MSCI
Given the investment horizon of 90 days Exchange Traded Concepts is expected to under-perform the IShares MSCI. In addition to that, Exchange Traded is 1.02 times more volatile than iShares MSCI India. It trades about -0.08 of its total potential returns per unit of risk. iShares MSCI India is currently generating about 0.08 per unit of volatility. If you would invest 8,121 in iShares MSCI India on August 30, 2024 and sell it today you would earn a total of 142.00 from holding iShares MSCI India or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Exchange Traded Concepts vs. iShares MSCI India
Performance |
| Timeline |
| Exchange Traded Concepts |
| iShares MSCI India |
Exchange Traded and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exchange Traded and IShares MSCI
The main advantage of trading using opposite Exchange Traded and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Traded 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.| Exchange Traded vs. VanEck India Growth | Exchange Traded vs. Franklin FTSE India | Exchange Traded vs. Columbia India Consumer | Exchange Traded vs. First Trust India |
| IShares MSCI vs. Columbia India Consumer | IShares MSCI vs. iShares India 50 | IShares MSCI vs. iShares MSCI India | IShares MSCI vs. Invesco India ETF |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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