Correlation Between IShares Edge and IShares Core
Can any of the company-specific risk be diversified away by investing in both IShares Edge and IShares Core 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 Edge and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Edge MSCI and iShares Core MSCI, you can compare the effects of market volatilities on IShares Edge and IShares Core 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 Edge with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Edge and IShares Core.
Diversification Opportunities for IShares Edge and IShares Core
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding iShares Edge MSCI and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI and IShares Edge 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 Edge MSCI are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core MSCI has no effect on the direction of IShares Edge i.e., IShares Edge and IShares Core go up and down completely randomly.
Pair Corralation between IShares Edge and IShares Core
Assuming the 90 days trading horizon iShares Edge MSCI is expected to under-perform the IShares Core. In addition to that, IShares Edge is 1.15 times more volatile than iShares Core MSCI. It trades about -0.05 of its total potential returns per unit of risk. iShares Core MSCI is currently generating about 0.08 per unit of volatility. If you would invest 7,903 in iShares Core MSCI on September 12, 2024 and sell it today you would earn a total of 96.00 from holding iShares Core MSCI or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Edge MSCI vs. iShares Core MSCI
Performance |
| Timeline |
| iShares Edge MSCI |
| iShares Core MSCI |
IShares Edge and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Edge and IShares Core
The main advantage of trading using opposite IShares Edge and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Edge position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| IShares Edge vs. iShares III Public | IShares Edge vs. iShares Core MSCI | IShares Edge vs. iShares France Govt | IShares Edge vs. iShares Core FTSE |
| IShares Core vs. iShares III Public | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares France Govt | IShares Core vs. iShares Edge MSCI |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |