Correlation Between IShares MSCI and Invesco China
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Invesco China 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 Invesco China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI China and Invesco China Technology, you can compare the effects of market volatilities on IShares MSCI and Invesco China 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 Invesco China. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Invesco China.
Diversification Opportunities for IShares MSCI and Invesco China
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Invesco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and Invesco China Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco China Technology 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 China are associated (or correlated) with Invesco China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco China Technology has no effect on the direction of IShares MSCI i.e., IShares MSCI and Invesco China go up and down completely randomly.
Pair Corralation between IShares MSCI and Invesco China
Given the investment horizon of 90 days IShares MSCI is expected to generate 1.38 times less return on investment than Invesco China. But when comparing it to its historical volatility, iShares MSCI China is 1.18 times less risky than Invesco China. It trades about 0.3 of its potential returns per unit of risk. Invesco China Technology is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 3,780 in Invesco China Technology on November 9, 2024 and sell it today you would earn a total of 494.00 from holding Invesco China Technology or generate 13.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI China vs. Invesco China Technology
Performance |
| Timeline |
| iShares MSCI China |
| Invesco China Technology |
IShares MSCI and Invesco China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Invesco China
The main advantage of trading using opposite IShares MSCI and Invesco China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Invesco China 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 Invesco China will offset losses from the drop in Invesco China's long position.| IShares MSCI vs. KraneShares CSI China | IShares MSCI vs. Invesco China Technology | IShares MSCI vs. iShares MSCI India | IShares MSCI vs. Xtrackers Harvest CSI |
| Invesco China vs. KraneShares CSI China | Invesco China vs. iShares MSCI China | Invesco China vs. Global X MSCI | Invesco China vs. Xtrackers Harvest CSI |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |