Correlation Between IShares Edge and Wahed Dow
Can any of the company-specific risk be diversified away by investing in both IShares Edge and Wahed Dow 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 Wahed Dow 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 Wahed Dow Jones, you can compare the effects of market volatilities on IShares Edge and Wahed Dow 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 Wahed Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Edge and Wahed Dow.
Diversification Opportunities for IShares Edge and Wahed Dow
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Wahed is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares Edge MSCI and Wahed Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahed Dow Jones 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 Wahed Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahed Dow Jones has no effect on the direction of IShares Edge i.e., IShares Edge and Wahed Dow go up and down completely randomly.
Pair Corralation between IShares Edge and Wahed Dow
Given the investment horizon of 90 days iShares Edge MSCI is expected to generate 0.92 times more return on investment than Wahed Dow. However, iShares Edge MSCI is 1.09 times less risky than Wahed Dow. It trades about -0.17 of its potential returns per unit of risk. Wahed Dow Jones is currently generating about -0.22 per unit of risk. If you would invest 2,849 in iShares Edge MSCI on August 30, 2024 and sell it today you would lose (87.00) from holding iShares Edge MSCI or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Edge MSCI vs. Wahed Dow Jones
Performance |
| Timeline |
| iShares Edge MSCI |
| Wahed Dow Jones |
IShares Edge and Wahed Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Edge and Wahed Dow
The main advantage of trading using opposite IShares Edge and Wahed Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Edge position performs unexpectedly, Wahed Dow 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 Wahed Dow will offset losses from the drop in Wahed Dow's long position.| IShares Edge vs. iShares MSCI Intl | IShares Edge vs. iShares MSCI Intl | IShares Edge vs. iShares MSCI Emerging | IShares Edge 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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