Correlation Between IShares MSCI and MicroSectors FANG
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and MicroSectors FANG 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 MicroSectors FANG 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 MicroSectors FANG ETN, you can compare the effects of market volatilities on IShares MSCI and MicroSectors FANG 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 MicroSectors FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and MicroSectors FANG.
Diversification Opportunities for IShares MSCI and MicroSectors FANG
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and MicroSectors is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and MicroSectors FANG ETN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors FANG ETN 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 MicroSectors FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors FANG ETN has no effect on the direction of IShares MSCI i.e., IShares MSCI and MicroSectors FANG go up and down completely randomly.
Pair Corralation between IShares MSCI and MicroSectors FANG
Given the investment horizon of 90 days iShares MSCI China is expected to generate 0.84 times more return on investment than MicroSectors FANG. However, iShares MSCI China is 1.19 times less risky than MicroSectors FANG. It trades about 0.23 of its potential returns per unit of risk. MicroSectors FANG ETN is currently generating about -0.01 per unit of risk. If you would invest 4,562 in iShares MSCI China on November 5, 2024 and sell it today you would earn a total of 279.00 from holding iShares MSCI China or generate 6.12% 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. MicroSectors FANG ETN
Performance |
| Timeline |
| iShares MSCI China |
| MicroSectors FANG ETN |
IShares MSCI and MicroSectors FANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and MicroSectors FANG
The main advantage of trading using opposite IShares MSCI and MicroSectors FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, MicroSectors FANG 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 MicroSectors FANG will offset losses from the drop in MicroSectors FANG'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 |
| MicroSectors FANG vs. iShares Dividend and | MicroSectors FANG vs. Martin Currie Sustainable | MicroSectors FANG vs. VictoryShares THB Mid | MicroSectors FANG vs. Mast Global Battery |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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