Correlation Between IShares Corp and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Corp 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 Corp 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 Corp Bond and iShares MSCI Japan, you can compare the effects of market volatilities on IShares Corp 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 Corp with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Corp and IShares MSCI.
Diversification Opportunities for IShares Corp and IShares MSCI
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares Corp Bond and iShares MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Japan and IShares Corp 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 Corp Bond 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 Japan has no effect on the direction of IShares Corp i.e., IShares Corp and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Corp and IShares MSCI
Assuming the 90 days trading horizon IShares Corp is expected to generate 1.5 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, iShares Corp Bond is 5.2 times less risky than IShares MSCI. It trades about 0.12 of its potential returns per unit of risk. iShares MSCI Japan is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 504.00 in iShares MSCI Japan on November 18, 2024 and sell it today you would earn a total of 3.00 from holding iShares MSCI Japan or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares Corp Bond vs. iShares MSCI Japan
Performance |
| Timeline |
| iShares Corp Bond |
| iShares MSCI Japan |
IShares Corp and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Corp and IShares MSCI
The main advantage of trading using opposite IShares Corp and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Corp 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 Corp vs. iShares MSCI Japan | IShares Corp vs. iShares JP Morgan | IShares Corp vs. iShares MSCI Europe | IShares Corp vs. iShares Nasdaq Biotechnology |
| IShares MSCI vs. iShares JP Morgan | IShares MSCI vs. iShares MSCI Europe | IShares MSCI vs. iShares Nasdaq Biotechnology | IShares MSCI vs. iShares Global Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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