Correlation Between IShares Edge and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Edge 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 Edge 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 Edge MSCI and iShares MSCI USA, you can compare the effects of market volatilities on IShares Edge 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 Edge with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Edge and IShares MSCI.
Diversification Opportunities for IShares Edge and IShares MSCI
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding iShares Edge MSCI and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and IShares Edge 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 Edge MSCI 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 USA has no effect on the direction of IShares Edge i.e., IShares Edge and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Edge and IShares MSCI
Given the investment horizon of 90 days IShares Edge is expected to generate 2.21 times less return on investment than IShares MSCI. In addition to that, IShares Edge is 1.04 times more volatile than iShares MSCI USA. It trades about 0.06 of its total potential returns per unit of risk. iShares MSCI USA is currently generating about 0.13 per unit of volatility. If you would invest 12,724 in iShares MSCI USA on August 31, 2024 and sell it today you would earn a total of 5,805 from holding iShares MSCI USA or generate 45.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Edge MSCI vs. iShares MSCI USA
Performance |
| Timeline |
| iShares Edge MSCI |
| iShares MSCI USA |
IShares Edge and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Edge and IShares MSCI
The main advantage of trading using opposite IShares Edge and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Edge 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 Edge vs. iShares Equity Factor | IShares Edge vs. iShares MSCI Emerging | IShares Edge vs. iShares MSCI USA | IShares Edge vs. iShares MSCI Intl |
| IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. Invesco SP 500 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |