Correlation Between IShares Global and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Global 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 Global 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 Global Consumer and iShares MSCI Japan, you can compare the effects of market volatilities on IShares Global 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 Global with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and IShares MSCI.
Diversification Opportunities for IShares Global and IShares MSCI
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Consumer and iShares MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Japan and IShares Global 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 Global Consumer 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 Japan has no effect on the direction of IShares Global i.e., IShares Global and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Global and IShares MSCI
Considering the 90-day investment horizon iShares Global Consumer is expected to generate 1.02 times more return on investment than IShares MSCI. However, IShares Global is 1.02 times more volatile than iShares MSCI Japan. It trades about 0.08 of its potential returns per unit of risk. iShares MSCI Japan is currently generating about 0.04 per unit of risk. If you would invest 15,058 in iShares Global Consumer on August 31, 2024 and sell it today you would earn a total of 3,137 from holding iShares Global Consumer or generate 20.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
iShares Global Consumer vs. iShares MSCI Japan
Performance |
| Timeline |
| iShares Global Consumer |
| iShares MSCI Japan |
IShares Global and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and IShares MSCI
The main advantage of trading using opposite IShares Global and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global 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 Global vs. Invesco Dynamic Food | IShares Global vs. Invesco Dynamic Building | IShares Global vs. Invesco DWA Utilities | IShares Global vs. Aquagold International |
| IShares MSCI vs. WisdomTree Japan SmallCap | IShares MSCI vs. iShares MSCI Israel | IShares MSCI vs. iShares MSCI Kokusai | IShares MSCI vs. iShares MSCI China |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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