Correlation Between IShares MSCI and IShares Emerging
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares Emerging 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 IShares Emerging 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 iShares Emerging Markets, you can compare the effects of market volatilities on IShares MSCI and IShares Emerging 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 IShares Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares Emerging.
Diversification Opportunities for IShares MSCI and IShares Emerging
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and iShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Emerging Markets 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 IShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Emerging Markets has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares Emerging go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares Emerging
Given the investment horizon of 90 days iShares MSCI China is expected to generate 2.13 times more return on investment than IShares Emerging. However, IShares MSCI is 2.13 times more volatile than iShares Emerging Markets. It trades about 0.04 of its potential returns per unit of risk. iShares Emerging Markets is currently generating about 0.0 per unit of risk. If you would invest 4,379 in iShares MSCI China on September 1, 2024 and sell it today you would earn a total of 353.00 from holding iShares MSCI China or generate 8.06% 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. iShares Emerging Markets
Performance |
| Timeline |
| iShares MSCI China |
| iShares Emerging Markets |
IShares MSCI and IShares Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares Emerging
The main advantage of trading using opposite IShares MSCI and IShares Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares Emerging 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 Emerging will offset losses from the drop in IShares Emerging'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 |
| IShares Emerging vs. Franklin Templeton ETF | IShares Emerging vs. Altrius Global Dividend | IShares Emerging vs. Invesco Exchange Traded | IShares Emerging vs. Franklin International Core |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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