Correlation Between IShares Edge and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Edge and IShares MSCI 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 MSCI 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 MSCI World, you can compare the effects of market volatilities on IShares Edge and IShares MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Edge and IShares MSCI.
Diversification Opportunities for IShares Edge and IShares MSCI
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding iShares Edge MSCI and iShares MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI World 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI World has no effect on the direction of IShares Edge i.e., IShares Edge and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Edge and IShares MSCI
Assuming the 90 days trading horizon iShares Edge MSCI is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, iShares Edge MSCI is 1.14 times less risky than IShares MSCI. The etf trades about -0.08 of its potential returns per unit of risk. The iShares MSCI World is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 7,174 in iShares MSCI World on September 1, 2024 and sell it today you would earn a total of 534.00 from holding iShares MSCI World or generate 7.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Edge MSCI vs. iShares MSCI World
Performance |
| Timeline |
| iShares Edge MSCI |
| iShares MSCI World |
IShares Edge and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Edge and IShares MSCI
The main advantage of trading using opposite IShares Edge and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Edge position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| IShares Edge vs. iShares Core MSCI | IShares Edge vs. BlackRock ESG Multi Asset | IShares Edge vs. Pershing Square Holdings | IShares Edge vs. ASML Holding NV |
| IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. BlackRock ESG Multi Asset | IShares MSCI vs. Pershing Square Holdings | IShares MSCI vs. ASML Holding NV |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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