Correlation Between IShares MSCI and ETF Series
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and ETF Series 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 ETF Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI USA and ETF Series Solutions, you can compare the effects of market volatilities on IShares MSCI and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and ETF Series.
Diversification Opportunities for IShares MSCI and ETF Series
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and ETF is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 USA are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of IShares MSCI i.e., IShares MSCI and ETF Series go up and down completely randomly.
Pair Corralation between IShares MSCI and ETF Series
Given the investment horizon of 90 days iShares MSCI USA is expected to generate 1.07 times more return on investment than ETF Series. However, IShares MSCI is 1.07 times more volatile than ETF Series Solutions. It trades about 0.34 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.22 per unit of risk. If you would invest 17,642 in iShares MSCI USA on September 1, 2024 and sell it today you would earn a total of 887.00 from holding iShares MSCI USA or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares MSCI USA vs. ETF Series Solutions
Performance |
| Timeline |
| iShares MSCI USA |
| ETF Series Solutions |
IShares MSCI and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and ETF Series
The main advantage of trading using opposite IShares MSCI and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| IShares MSCI vs. Vanguard Total Stock | IShares MSCI vs. SPDR SP 500 | IShares MSCI vs. iShares Core SP | IShares MSCI vs. Vanguard Dividend Appreciation |
| ETF Series vs. iShares Core SP | ETF Series vs. iShares Core MSCI | ETF Series vs. iShares Broad USD | ETF Series vs. iShares Core SP |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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