Correlation Between IShares MSCI and Pacer Nasdaq
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Pacer Nasdaq 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 Pacer Nasdaq 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 Pacer Nasdaq International, you can compare the effects of market volatilities on IShares MSCI and Pacer Nasdaq 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 Pacer Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Pacer Nasdaq.
Diversification Opportunities for IShares MSCI and Pacer Nasdaq
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Pacer is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Intl and Pacer Nasdaq International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Nasdaq Interna 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 Pacer Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Nasdaq Interna has no effect on the direction of IShares MSCI i.e., IShares MSCI and Pacer Nasdaq go up and down completely randomly.
Pair Corralation between IShares MSCI and Pacer Nasdaq
Given the investment horizon of 90 days iShares MSCI Intl is expected to generate 0.93 times more return on investment than Pacer Nasdaq. However, iShares MSCI Intl is 1.07 times less risky than Pacer Nasdaq. It trades about 0.04 of its potential returns per unit of risk. Pacer Nasdaq International is currently generating about 0.01 per unit of risk. If you would invest 3,095 in iShares MSCI Intl on September 14, 2024 and sell it today you would earn a total of 282.00 from holding iShares MSCI Intl or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.45% |
| Values | Daily Returns |
iShares MSCI Intl vs. Pacer Nasdaq International
Performance |
| Timeline |
| iShares MSCI Intl |
| Pacer Nasdaq Interna |
IShares MSCI and Pacer Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Pacer Nasdaq
The main advantage of trading using opposite IShares MSCI and Pacer Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Pacer Nasdaq 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 Pacer Nasdaq will offset losses from the drop in Pacer Nasdaq's long position.| IShares MSCI vs. iShares Currency Hedged | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares Edge MSCI | IShares MSCI vs. iShares MSCI Intl |
| Pacer Nasdaq vs. iShares MSCI Intl | Pacer Nasdaq vs. iShares MSCI Intl | Pacer Nasdaq vs. iShares Currency Hedged | Pacer Nasdaq vs. iShares Edge MSCI |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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