Correlation Between IShares MSCI and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Sterling Capital 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 Sterling Capital 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 Sterling Capital Focus, you can compare the effects of market volatilities on IShares MSCI and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Sterling Capital.
Diversification Opportunities for IShares MSCI and Sterling Capital
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Sterling is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and Sterling Capital Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Focus 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Focus has no effect on the direction of IShares MSCI i.e., IShares MSCI and Sterling Capital go up and down completely randomly.
Pair Corralation between IShares MSCI and Sterling Capital
Given the investment horizon of 90 days iShares MSCI USA is expected to generate 0.64 times more return on investment than Sterling Capital. However, iShares MSCI USA is 1.57 times less risky than Sterling Capital. It trades about 0.12 of its potential returns per unit of risk. Sterling Capital Focus is currently generating about 0.07 per unit of risk. If you would invest 11,409 in iShares MSCI USA on August 30, 2024 and sell it today you would earn a total of 7,016 from holding iShares MSCI USA or generate 61.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI USA vs. Sterling Capital Focus
Performance |
| Timeline |
| iShares MSCI USA |
| Sterling Capital Focus |
IShares MSCI and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Sterling Capital
The main advantage of trading using opposite IShares MSCI and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. Invesco SP 500 |
| Sterling Capital vs. iShares MSCI USA | Sterling Capital vs. iShares MSCI USA | Sterling Capital vs. iShares MSCI USA | Sterling Capital vs. iShares Expanded Tech Software |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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