Correlation Between HCM Defender and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both HCM Defender 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 HCM Defender and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCM Defender 100 and iShares MSCI USA, you can compare the effects of market volatilities on HCM Defender 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 HCM Defender with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCM Defender and IShares MSCI.
Diversification Opportunities for HCM Defender and IShares MSCI
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HCM and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding HCM Defender 100 and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and HCM Defender 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 HCM Defender 100 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 USA has no effect on the direction of HCM Defender i.e., HCM Defender and IShares MSCI go up and down completely randomly.
Pair Corralation between HCM Defender and IShares MSCI
Considering the 90-day investment horizon HCM Defender 100 is expected to generate 1.64 times more return on investment than IShares MSCI. However, HCM Defender is 1.64 times more volatile than iShares MSCI USA. It trades about 0.1 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.11 per unit of risk. If you would invest 5,660 in HCM Defender 100 on September 1, 2024 and sell it today you would earn a total of 969.00 from holding HCM Defender 100 or generate 17.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
HCM Defender 100 vs. iShares MSCI USA
Performance |
Timeline |
HCM Defender 100 |
iShares MSCI USA |
HCM Defender and IShares MSCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HCM Defender and IShares MSCI
The main advantage of trading using opposite HCM Defender and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCM Defender 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.HCM Defender vs. HCM Defender 500 | HCM Defender vs. Xtrackers SP 500 | HCM Defender vs. Pacer Trendpilot 100 | HCM Defender vs. American Century Quality |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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