Correlation Between Litman Gregory and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Litman Gregory 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 Litman Gregory and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litman Gregory Funds and iShares MSCI Singapore, you can compare the effects of market volatilities on Litman Gregory 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 Litman Gregory with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litman Gregory and IShares MSCI.
Diversification Opportunities for Litman Gregory and IShares MSCI
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Litman and IShares is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Litman Gregory Funds and iShares MSCI Singapore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Singapore and Litman Gregory 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 Litman Gregory Funds 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 Singapore has no effect on the direction of Litman Gregory i.e., Litman Gregory and IShares MSCI go up and down completely randomly.
Pair Corralation between Litman Gregory and IShares MSCI
Given the investment horizon of 90 days Litman Gregory Funds is expected to generate 3.53 times more return on investment than IShares MSCI. However, Litman Gregory is 3.53 times more volatile than iShares MSCI Singapore. It trades about 0.1 of its potential returns per unit of risk. iShares MSCI Singapore is currently generating about 0.2 per unit of risk. If you would invest 944.00 in Litman Gregory Funds on August 25, 2024 and sell it today you would earn a total of 159.00 from holding Litman Gregory Funds or generate 16.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Litman Gregory Funds vs. iShares MSCI Singapore
Performance |
| Timeline |
| Litman Gregory Funds |
| iShares MSCI Singapore |
Litman Gregory and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litman Gregory and IShares MSCI
The main advantage of trading using opposite Litman Gregory and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litman Gregory 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.| Litman Gregory vs. Freedom Day Dividend | Litman Gregory vs. Davis Select International | Litman Gregory vs. iShares MSCI China | Litman Gregory vs. SmartETFs Dividend Builder |
| IShares MSCI vs. iShares MSCI Hong | IShares MSCI vs. HUMANA INC | IShares MSCI vs. SCOR PK | IShares MSCI vs. Aquagold International |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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