Correlation Between IShares MSCI and ETRACS 2x
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and ETRACS 2x 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 ETRACS 2x 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 ETRACS 2x Leveraged, you can compare the effects of market volatilities on IShares MSCI and ETRACS 2x 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 ETRACS 2x. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and ETRACS 2x.
Diversification Opportunities for IShares MSCI and ETRACS 2x
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and ETRACS is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and ETRACS 2x Leveraged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS 2x Leveraged 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 ETRACS 2x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS 2x Leveraged has no effect on the direction of IShares MSCI i.e., IShares MSCI and ETRACS 2x go up and down completely randomly.
Pair Corralation between IShares MSCI and ETRACS 2x
Given the investment horizon of 90 days IShares MSCI is expected to generate 2.32 times less return on investment than ETRACS 2x. In addition to that, IShares MSCI is 2.14 times more volatile than ETRACS 2x Leveraged. It trades about 0.04 of its total potential returns per unit of risk. ETRACS 2x Leveraged is currently generating about 0.19 per unit of volatility. If you would invest 3,386 in ETRACS 2x Leveraged on September 1, 2024 and sell it today you would earn a total of 966.00 from holding ETRACS 2x Leveraged or generate 28.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares MSCI China vs. ETRACS 2x Leveraged
Performance |
| Timeline |
| iShares MSCI China |
| ETRACS 2x Leveraged |
IShares MSCI and ETRACS 2x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and ETRACS 2x
The main advantage of trading using opposite IShares MSCI and ETRACS 2x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, ETRACS 2x 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 ETRACS 2x will offset losses from the drop in ETRACS 2x'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 |
| ETRACS 2x vs. Vanguard Minimum Volatility | ETRACS 2x vs. ProShares VIX Mid Term | ETRACS 2x vs. ProShares VIX Short Term | ETRACS 2x vs. ETF Series Solutions |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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