Correlation Between IShares Equity and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Equity 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 Equity 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 Equity Factor and iShares MSCI USA, you can compare the effects of market volatilities on IShares Equity 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 Equity with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Equity and IShares MSCI.
Diversification Opportunities for IShares Equity and IShares MSCI
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Equity Factor 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 Equity 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 Equity Factor 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 Equity i.e., IShares Equity and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Equity and IShares MSCI
Given the investment horizon of 90 days IShares Equity is expected to generate 1.2 times less return on investment than IShares MSCI. In addition to that, IShares Equity is 1.03 times more volatile than iShares MSCI USA. It trades about 0.22 of its total potential returns per unit of risk. iShares MSCI USA is currently generating about 0.27 per unit of volatility. If you would invest 14,981 in iShares MSCI USA on August 25, 2024 and sell it today you would earn a total of 797.00 from holding iShares MSCI USA or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Equity Factor vs. iShares MSCI USA
Performance |
| Timeline |
| iShares Equity Factor |
| iShares MSCI USA |
IShares Equity and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Equity and IShares MSCI
The main advantage of trading using opposite IShares Equity and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Equity 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 Equity vs. Morningstar Unconstrained Allocation | IShares Equity vs. High Yield Municipal Fund | IShares Equity vs. Via Renewables | IShares Equity vs. Knife River |
| IShares MSCI vs. iShares Equity Factor | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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