Correlation Between IShares MSCI and IShares Environmental
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares Environmental 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 Environmental 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 Environmental Infrastructure, you can compare the effects of market volatilities on IShares MSCI and IShares Environmental 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 Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares Environmental.
Diversification Opportunities for IShares MSCI and IShares Environmental
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and iShares Environmental Infrastr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Environmental 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 Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Environmental has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares Environmental go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares Environmental
Given the investment horizon of 90 days iShares MSCI China is expected to generate 2.59 times more return on investment than IShares Environmental. However, IShares MSCI is 2.59 times more volatile than iShares Environmental Infrastructure. It trades about 0.34 of its potential returns per unit of risk. iShares Environmental Infrastructure is currently generating about -0.11 per unit of risk. If you would invest 4,774 in iShares MSCI China on November 28, 2024 and sell it today you would earn a total of 632.00 from holding iShares MSCI China or generate 13.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI China vs. iShares Environmental Infrastr
Performance |
| Timeline |
| iShares MSCI China |
| iShares Environmental |
IShares MSCI and IShares Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares Environmental
The main advantage of trading using opposite IShares MSCI and IShares Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares Environmental 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 Environmental will offset losses from the drop in IShares Environmental'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 Environmental vs. Strategy Shares | IShares Environmental vs. Freedom Day Dividend | IShares Environmental vs. Franklin Templeton ETF | IShares Environmental vs. iShares MSCI China |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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