Correlation Between IShares MSCI and MULTI UNITS
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and MULTI UNITS 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 MULTI UNITS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI World and MULTI UNITS LUXEMBOURG , you can compare the effects of market volatilities on IShares MSCI and MULTI UNITS 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 MULTI UNITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and MULTI UNITS.
Diversification Opportunities for IShares MSCI and MULTI UNITS
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and MULTI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI World and MULTI UNITS LUXEMBOURG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MULTI UNITS LUXEMBOURG 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 World are associated (or correlated) with MULTI UNITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MULTI UNITS LUXEMBOURG has no effect on the direction of IShares MSCI i.e., IShares MSCI and MULTI UNITS go up and down completely randomly.
Pair Corralation between IShares MSCI and MULTI UNITS
Assuming the 90 days trading horizon iShares MSCI World is expected to generate 0.42 times more return on investment than MULTI UNITS. However, iShares MSCI World is 2.35 times less risky than MULTI UNITS. It trades about 0.08 of its potential returns per unit of risk. MULTI UNITS LUXEMBOURG is currently generating about 0.03 per unit of risk. If you would invest 7,178 in iShares MSCI World on September 3, 2024 and sell it today you would earn a total of 595.00 from holding iShares MSCI World or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
iShares MSCI World vs. MULTI UNITS LUXEMBOURG
Performance |
| Timeline |
| iShares MSCI World |
| MULTI UNITS LUXEMBOURG |
IShares MSCI and MULTI UNITS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and MULTI UNITS
The main advantage of trading using opposite IShares MSCI and MULTI UNITS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, MULTI UNITS 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 MULTI UNITS will offset losses from the drop in MULTI UNITS's long position.| IShares MSCI vs. iShares Corp Bond | IShares MSCI vs. iShares Emerging Asia | IShares MSCI vs. iShares MSCI Global | IShares MSCI vs. iShares VII PLC |
| MULTI UNITS vs. UBSFund Solutions MSCI | MULTI UNITS vs. Vanguard SP 500 | MULTI UNITS vs. iShares VII PLC | MULTI UNITS vs. iShares Core SP |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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